22 June GBPUSD outlook: Bearish momentum persists

GBPUSD extended its losses after breaking below its ascending trend line, signalling that bearish momentum is gaining traction. The pair continues to form lower swings, while the MACD remains in negative territory, reinforcing the prevailing downward bias.

As long as GBPUSD stays below 1.3280, the pair may continue its decline, with a break beneath 1.3160 exposing the next downside potential target at 1.3020.

Conversely, a close above 1.3280 could pave the way for a recovery toward the next resistance at 1.34238.

Fundamentally, GBPUSD remains under pressure as mounting political uncertainty and a cautious Bank of England outlook continue to weigh on the pound.

Investor sentiment has deteriorated amid growing speculation that Prime Minister Starmer could announce a timetable for his resignation, increasing uncertainty over the UK’s political landscape and the direction of future fiscal policy. The heightened uncertainty has reduced demand for sterling while encouraging flows into the US dollar.

At the same time, the Bank of England kept interest rates unchanged and maintained a measured policy approach, while lowering its peak inflation forecast. The decision reinforced expectations that policymakers may proceed cautiously, reducing support for the pound.

Meanwhile, the Federal Reserve’s hawkish stance and expectations of higher-for-longer US interest rates have continued to underpin the dollar, further widening the policy divergence between the two central banks.

Overall, stronger US dollar fundamentals, political uncertainty in the UK, and a cautious Bank of England suggest the balance of risks remains tilted to the downside for GBPUSD. While the possibility of further BoE tightening if inflation proves persistent may help cushion its decline, it is unlikely to offset the combination of political headwinds and a resilient US dollar, leaving the pair vulnerable to further weakness.