• UK economy contracts in April, pressuring Pound before BoE decision.
• US-Iran signing readiness drags WTI lower, easing inflation fears.
• Michigan sentiment improves as one-year inflation expectations edge lower.

The Pound Sterling turned negative on Friday against the US Dollar after data from the UK showed the economy contracted in April, while an agreement between the US and Iran improved risk appetite. Yet the Greenback erased its earlier losses and traded above its opening price. At the time of writing, the GBP/USD trades at 1.3413, virtually unchanged.

Risk on mood, as Washington and Tehran are set to sign

Sentiment improved after newswires reported that Washington and Tehran are closing in on a deal, which, according to Western media, could be signed in Geneva, Switzerland, between June 15-17. Iran’s officials denied those claims, revealed Tehran-linked media, and the Iranian Foreign Minister said that the Islamabad Memorandum of Understanding (MOU) has never been closer and is pending finalization, and that the media should refrain from speculating about its content.

Breaking news reported by Al Arabiya said that the US and Iran informed mediators of their readiness to sign, citing diplomatic sources. Consequently, Oil prices have fallen, with WTI trading down over 2.20% to $84.47 per barrel.

Fed rate cut odds toward the end of 2026, trimmed from 88% to 68%

The news had eased inflationary pressures. Money markets are expecting 16 basis points (bps) of rate hikes by the US Federal Reserve towards the end of the year, down from 22 bps a day ago, revealed Prime Terminal data.

The US Dollar Index (DXY), which tracks the buck’s value against a basket of currencies, holds steady at 99.68, a headwind for GBP/USD.

The US Consumer Sentiment, as revealed by the University of Michigan (UoM), rose from 44.8 to 48.9 in June’s preliminary reading, while inflation expectations for one year eased from 4.8% to 4.6%.

In the UK, the Gross Domestic Product (GDP) contracted by -0.1% in April, after 0.3% growth in March. Next week, the UK economic calendar will feature inflation and employment figures ahead of the Bank of England's rate decision, which is expected to keep rates unchanged.

In the US, the data schedule will feature the Fed’s monetary policy decision and Retail Sales.

GBP/USD Price Forecast: Technical outlook

In the daily chart, GBP/USD trades at 1.3411, keeping a mildly bearish near-term tone as spot holds beneath a cluster of key trend and average-based barriers. Price now sits under the upward support trend line’s break point at 1.3415 and below the latest reading of the simple moving average cluster around 1.3468, suggesting rallies are being capped rather than sustained. The downward resistance trend line, with a break price near 1.3562, continues to frame the broader corrective phase, while the Relative Strength Index (14) hovering just below the 50 mark hints at fading bullish momentum rather than outright oversold conditions.

On the topside, initial resistance is seen at the reclaimed uptrend break area around 1.3415, where sellers are likely to defend the former support. Above that, the grouped 50-, 100- and 200-period simple moving averages around 1.3468 form a more substantial cap, ahead of the downtrend break level at 1.3562, which guards a deeper recovery. On the downside, the absence of clearly defined indicator-based floors below spot leaves sterling vulnerable to further slippage, with traders likely to look to recent swing lows on the chart as the next potential demand zones should 1.3411 give way on a daily close.

(The technical analysis of this story was written with the help of an AI tool.)