• Labour election losses fuel speculation over Starmer’s leadership.
• UK 30-year Gilt yields jump amid fiscal policy concerns.
• US-Iran tensions keep the USD supported ahead of US inflation data.

The Pound Sterling holds modestly firm during the North American session, down a minimal 0.06% as pressure mounts on the UK’s Prime Minister Keir Starmer as his party sustained losses in local elections. The GBP/USD trades at 1.3625 after hitting a daily high of 1.3630.

Pound holds near highs as UK political risks intensify

The UK PM Starmer said, “I know that people are frustrated by the state of Britain. Frustrated by politics, and some people frustrated with me.” Regarding Starmer's speech, Catherine West, a Labour MP who is threatening to launch a leadership campaign, commented that Starmer’s relaunch speech was “too little too late”.

West said that she would collect names of Labour MPs “to call on the prime minister to set out a timetable for the election of a new leader in September,” according to the Financial Times.

Meanwhile, the GBP/USD seems contained amid increasing speculation that Starmer could be ousted in September. Consequently, the UK 30-year GILT yield soared by over 10 basis points to 5.675%, spurred by fears that Great Britain could lean more to the left.

US Dollar remains bid on geopolitics

Also, rising tensions in the Middle East prompted traders to buy the US Dollar as Iran’s response to the US 14-point memo was seen by Trump as “totally unacceptable.”

Data in the US Existing Home Sales rose less than expected in April, up 0.2% MoM, at a seasonally adjusted rate of 4.02 million, according to the National Association of Realtors.

The data was largely ignored by market participants, who are awaiting the release of the Consumer Price Index (CPI), the Producer Price Index (PPI), and Retail Sales data in the US. In the UK, traders eye the release of Gross Domestic Product (GDP) data.

GBP/USD Price Forecast: Technical outlook

In the daily chart, GBP/USD trades at 1.3648. The pair holds well above a dense cluster of the 50-, 100- and 200-day simple moving averages (SMAs) around 1.34, keeping the broader bias bullish as the recent breakout extends away from the former descending resistance trend line, which now acts as a secondary floor. The upward-sloping support trend line traced from 1.3035 continues to underpin the advance, while the latest readings from the FXS Fed Sentiment Index, which has pushed to fresh highs, hint that external policy expectations may be reinforcing sterling’s constructive tone against the dollar.

On the downside, initial support is seen near the recent breakout area around 1.36, ahead of the rising support trend line currently intersecting close to 1.35. A deeper pullback would expose the key demand band formed by the converging 50-, 100- and 200-day SMAs clustered just above 1.34, where the former descending resistance line also converges, and which should act as a robust base while the bullish daily trend remains intact.

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