• GBP/USD attracts some dip-buying at the start of a new week, though it lacks follow-through.
• Iran tensions and hawkish Fed bets revive the USD demand, capping the upside for spot prices.
• The technical setup favors bulls and warrants caution before positioning for a meaningful fall.

The GBP/USD pair struggles to capitalize on its modest intraday bounce and remains below the 1.3600 mark through the Asian session on Monday amid the emergence of some US Dollar (USD) buying.

The recent optimism over a potential US-Iran peace deal faded rather quickly in the wake of renewed hostilities in the Strait of Hormuz and major disagreements over Tehran's nuclear program. This, along with reviving hawkish US Federal Reserve (Fed) expectations, revives the USD demand and keeps a lid on the GBP/USD pair rebound from the 1.3550-1.3545 region.

However, the Bank of England's (BoE) signal that rate hikes could be appropriate if inflation remains persistent, along with easing concerns over UK Prime Minister Keir Starmer’s position, act as a tailwind for the British Pound (GBP). This continues to act as a tailwind for the GBP/USD pair and warrants some caution before positioning for any meaningful downfall.

From a technical perspective, spot prices hold above the 100-period Exponential Moving Average (EMA), suggesting a mildly constructive near-term bias. That said, momentum indicators are mixed, with the Relative Strength Index (RSI) hovering near the neutral 50 line and the Moving Average Convergence Divergence (MACD) slipping marginally back below zero.

This, in turn, hints that the upside traction is tentative rather than impulsive. Hence, it will be prudent to wait for some follow-through buying beyond the 1.3635 horizontal barrier and momentum indicators to turn decisively higher before traders start positioning for the resumption of the GBP/USD pair's broader advance witnessed over the past month or so.

On the downside, initial support is reinforced by the 100-period EMA at 1.3538, and a break of which would expose a deeper correction toward prior lows. As long as the GBP/USD pair sustains above this moving average, buyers retain the short-term advantage, and a base-building phase could extend in the absence of any relevant market-moving economic data.

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

GBP/USD 4-hour chart