28.05.202603:44 Forex Analysis & Reviews: Overview of the GBP/USD Pair. May 28. A New Brexit Could Shake the UK

The GBP/USD currency pair also traded very sluggishly on Wednesday and leaned toward a new decline. One does not have to guess long why the British pound is falling. Yesterday, several high-ranking officials in Iran reported that enriched uranium is not a topic for discussion with Washington. Consequently, Donald Trump will not be able to achieve his goals. Therefore, the conflict, in one form or another, will exist for a very long time. Hence, dreaming about a memorandum of understanding is all that can be done right now. Thus, the conflict can resume at any moment. In the current circumstances, it is not surprising that the dollar is moderately rising again.

We still do not believe that the growth of the American currency will be strong without a full-scale war resuming. However, therein lies the issue: war could restart at any time. If the parties cannot reach an agreement and regularly violate the terms of the ceasefire, what else can the market expect? However, the British currency has recently developed its own factors for decline.

First, the consumer price index unexpectedly dropped to 2.8% in April for many. The market, which clearly expected to see a tightening of the Bank of England's monetary policy in June, was forced to hastily change its position. And along with this, the trading strategy. If an increase in the key rate allowed for an appreciation of the British currency, then refusal of that option implies a decline in the British pound.

Second, Britain is facing another political crisis. The British public clearly expressed their views on Keir Starmer's policies and the Labor Party during the local elections. The Labour Party lost the elections resoundingly, but it was not the Conservatives who won, as many might have assumed. Alternative political forces triumphed, further proving the obvious fact of a political split within British society.

It should be remembered that since Brexit, Britain has been in a permanent state of political crisis. Since the 2016 referendum, no prime minister has completed their term. Therefore, if Starmer is forced to resign, we would not be surprised at all.

Third, the Scottish Parliament has sent an official request to London for permission to hold a new independence referendum. It is worth noting that this is far from the first time Edinburgh has sought to break ties with London and return to the European Union. The majority of Scots voted to remain in the EU in 2016. During Boris Johnson's premiership, Scottish First Minister Nicola Sturgeon attempted to hold an independence referendum, but London at the time officially refused, citing the 2014 referendum, when the majority of Scots voted to remain in the United Kingdom. However, just two years later, the UK decided to leave the EU, an outcome the Scots clearly could not have foreseen in 2014. For ten years now, Scotland has been unsuccessfully trying to organize a new referendum and has not given up. The higher the likelihood of such a referendum, the stronger the pressure on the British pound will be.

The average volatility of the GBP/USD pair over the past 5 trading days is 58 pips. For the pound/dollar pair, this value is considered "low." Thus, on Thursday, May 28, we expect movement within a range limited by levels 1.3366 and 1.3482. The upper channel of the linear regression is directed upwards, indicating a recovery of the upward trend. The CCI indicator has not formed signals recently.

Nearest Support Levels:

S1 – 1.3428

S2 – 1.3367

S3 – 1.3303

Nearest Resistance Levels:

R1 – 1.3489

R2 – 1.3550

R3 – 1.3611

Trading Recommendations:

The GBP/USD currency pair continues to recover after a 300-pip crash. Trump's policies will continue to exert pressure on the U.S. economy, so we do not expect the U.S. currency to show long-term growth. However, 2026 still looks super positive for the dollar. Thus, long positions with targets of 1.3550 and 1.3611 can be considered when the price is above the moving average. If the price is below the moving average line, short trades can be employed with targets of 1.3367 and 1.3306 on geopolitical grounds. The market situation often changes, and it continues to track predominantly geopolitical news, which is not uniform.

Notes on Illustrations:

The linear regression channels help to determine the current trend. If both are directed in the same way, then the trend is currently strong;

The moving average line (settings 20,0, smoothed) determines the short-term trend and the direction in which trading should now be conducted;

Murray levels are target levels for movements and corrections;

Volatility levels (red lines) are the potential price channel in which the pair will move over the next 24 hours, based on current volatility readings;

The CCI indicator – its entry into the oversold area (below -250) or into the overbought area (above +250) indicates that a trend reversal in the opposite direction is approaching.