• GBP/USD gains some positive traction as easing inflationary concerns weigh on the USD.
• Fed rate hike bets and rising US-Iran tensions should limit USD losses and cap spot prices.
• The mixed technical setup, too, warrants caution before positioning for further upside.

The GBP/USD pair attracts some dip-buyers during the Asian session on Tuesday and stalls the previous day's pullback from the 1.3425 region, or the weekly high. Spot prices currently trade around the 1.3385 zone, up just over 0.10% for the day, though the upside potential seems limited.

The US Dollar (USD) edges lower as soft US Core Consumer Price Index (CPI) eased concerns about a runaway inflation spiral and turned out to be a key factor acting as a tailwind for the GBP/USD pair. Traders, however, are still pricing in a 70% chance that the US Federal Reserve (Fed) will hike interest rates by the end of this year. Apart from this, renewed hostilities between the US and Iran help limit deeper USD losses, capping the upside for the currency pair.

From a technical perspective, the GBP/USD pair keeps a bearish near-term bias beneath the 200-period Simple Moving Average (SMA) on the 4-hour chart, which coincides with the 50% Fibonacci retracement level of the recent slide from the 1.3655 region. Moreover, repeated failures to build on the momentum beyond the 23.6% Fibo. level warrants caution before positioning for any meaningful appreciating move in the near-term, despite improving momentum indicators.

The Moving Average Convergence Divergence (MACD) histogram remains slightly positive, while the Relative Strength Index (RSI) hovers near the neutral 50 mark. This hints at modest underlying demand but not yet enough to challenge the prevailing topside barriers at 1.3438 (38.2% level) and the 1.3475-1.3480 confluence – the 200-period SMA on the 4-hour chart and the 50% Fibo. Above that, the GBP/USD pair could rise to deeper Fibo. hurdles at 1.3520 and 1.3579.

On the downside, structural support is only clearly defined near the recent swing low anchor at 1.3305. A convincing break below this floor would likely reassert bearish momentum and make the GBP/USD pair vulnerable to further weakness. The broader setup, however, reinforces the idea of a market that is consolidating under medium-term resistance.

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

GBP/USD 4-hour chart