British Pound gains as Lebanon truce drama hits the US Dollar

The Pound Sterling (GBP) registers gains of over 0.16% on Thursday amid news that Israel and Lebanon agreed on a ceasefire, but headlines that Hezbollah rejected the plan triggered a retracement on Cable. The GBP/USD pair trades at 1.3439 after bouncing off daily highs of 1.3462.

GBP/USD rises as oil slump offsets Hezbollah uncertainty

Hostilities in the Middle East continued on Thursday, particularly Israel attacking the South of Lebanon. Meanwhile, Israeli forces began to withdraw from Dibbin in southern Lebanon, Al Hadath reported. Meanwhile, Iran reiterated that a ceasefire in Lebanon is crucial to advance in peace talks with the US.

A quick resolution of the Middle East conflict might ease inflationary pressures as major central banks are expected to maintain rates unchanged, while others, like the Reserve Bank of Australia (RBA), have tightened policy by 75 bps this year, citing the energy shock and Oil supply disruptions.

West Texas Intermediate (WTI), the US crude Oil benchmark, falls 3.3% to $93.04, a headwind for the Greenback due to its close correlation. The US Dollar Index (DXY), which measures the buck’s value against a basket of six currencies, is down 0.21% to 99.34.

US jobless claims for the week ending May 30 exceeded estimates of 213K, coming at 225K, up from a downwardly revised 212K in the previous week. The 4-week average stood at 214.75K, nearly 5K above the previous reading of 208.25K. The Challenger Job Cuts in May rose from 83.387K to 97.006K, with nearly 39% in the technology sector, a 16% increase from April.

Despite this, the labor market is stable as traders eye the release of Friday’s Nonfarm Payrolls report for May, which is expected to show the economy adding 85K people to the workforce, and the Unemployment Rate remaining at 4.3%.

In the UK, amid political turmoil and the possibility of being sacked, British Prime Minister Keir Starmer is facing his own party looking to replace him following the local election results.

Aside from this, comments from Bank of England (BoE) policymakers have been supportive of Sterling, with Governor Andrew Bailey saying that, if not for the events in the Persian Gulf, inflation would be at the 2% target. Two days ago, BoE MPC Megan Greene commented that she sees a growing case for a rate hike.

Money markets are pricing in approximately 47 basis points of Bank of England rate increases in 2026, implying that traders expect at least two rate hikes by the central bank.

GBP/USD Price Forecast: Technical outlook

In the daily chart, GBP/USD trades at 1.3434. The pair is oscillating around its recent range midpoint, holding above the upward support trend line break near 1.3387 but still below the simple moving average at 1.3452, which leaves the near-term bias broadly neutral with a slight downside tilt. The Relative Strength Index (14) around 47 suggests subdued momentum, while the latest FXS Fed Sentiment Index print at 148.83 hints that broader macro sentiment remains supportive but not sufficiently strong yet to overcome nearby technical caps.

On the topside, immediate resistance is seen at the simple moving average around 1.3452, with a stronger barrier at the downward resistance trend line break near 1.3587, where sellers could reassert control if the bounce extends. On the downside, initial support comes in at the upward support trend line break around 1.3387; a sustained break below this floor would expose the recent lows and open the door to a deeper correction within the broader consolidation.

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

(This story was corrected on June 4 at 15:51 GMT to say that the US Dollar Index is down 0.21%, not 9.21%, and to say that the Initial Jobless Claims 4-week average previous week print was 208.25K instead of 209K.)