GBPUSD is stuck in flat trend amid Middle East uncertainty

GBPUSD remains in a flat trend, hovering around 1.3420. Market attention has recently been glued to the US-Iran peace talks—the pair’s key driver. A temporary truce between Israel and Lebanon initially raised hopes for further de-escalation, but those hopes proved to be short-lived. Today, geopolitical tensions have resumed, bringing the so-called “war premium” back into prices.

The protracted conflict has taken a real toll on the UK economy. The pound is also weighed down by global instability. The Construction Purchasing Managers' Index (PMI) for May plunged to a six-year low of 38.2 due to a surge in energy costs and supply disruptions. Moreover, inflation remains elevated, leaving the Bank of England (BoE) in a predicament. On the one hand, a rate hike is needed to curb rising consumer prices; on the other, it could deliver a heavy blow to an already weakening economy.

UK GDP is currently clinging to distorted seasonal data, but this illusion will soon fade as business sentiment darkens. The political crisis is only making it worse: the threat of a no-confidence vote against the Prime Minister, along with the risk that opposition figures could return to Parliament in the June 18 by-elections, is prompting investors to brace for further weakness in the pound.

Across the Atlantic, the Federal Reserve’s hawkish rhetoric continues to support the US dollar. Dallas Fed President Lorie Logan has recently called for raising borrowing costs to tame energy-driven inflation, which keeps gaining momentum. Besides, the greenback benefits from its safe-haven status amid escalating geopolitical jitters.

From a technical standpoint, GBPUSD is now moving within the 1.33635–1.35100 flat range. The Average Directional Index (ADX) sits low—between 14 and 17—signaling no clear trend. Its +DI (9) and -DI (16) lines periodically cross each other, suggesting that neither bulls nor bears have the upper hand.

Consider the following trading strategy:

Sell GBPUSD from 1.34300. Place Take profit at 1.33500 and Stop loss at 1.34860.

The forecast remains relevant between June 5 and June 12, 2026.