GBP/USD Breaks Lower as UK Political Turmoil Revives Dollar Strength

GBP/USD has turned sharply lower as growing political instability in the UK finally begins to weigh heavily on sterling. Concerns around Prime Minister Keir Starmer’s leadership, rising fiscal uncertainty, and fears of more aggressive government spending under a potential leadership shift are increasing pressure on the pound, even despite stronger-than-expected UK economic data.

At the same time, strong US economic reports, including retail sales and inflation-related data, are reinforcing the view that the Federal Reserve may need to keep interest rates higher for longer. This has helped revive US dollar strength, with the dollar index breaking above key technical resistance levels and shifting the broader outlook back in favour of the greenback.

Technically, GBP/USD confirmed a bearish breakdown from its rising wedge pattern and has now fallen below 200 & 50 Day moving averages. Momentum indicators are also turning increasingly bearish, suggesting downside risks remain elevated. Key support level is now seen near 1.3340, while the 200 & 50 Day SMA zone and 1.3450 have become an important resistance area for any short-term rebounds.

GBP/USD Daily Chart