21 Jul

GBP/USD Falls After Cabinet Changes

July 21, 2026

By Analytical Department RoboForex

GBP/USD fell to 1.3437 on Tuesday as investors assessed the appointment of Andy Burnham as the new Prime Minister of the UK and the outlook for monetary policy.

Burnham succeeded Keir Starmer without a contest, becoming the country’s seventh prime minister in the past decade and the second since the Labour Party returned to power in 2024.

The new head of government reaffirmed his commitment to current fiscal rules but indicated he would consider raising the tax-free personal allowance, which has remained frozen in recent years.

Attention is now turning to the appointment of the Chancellor of the Exchequer. According to media reports, Shabana Mahmood is considered the leading candidate.

Additional pressure on the pound is coming from elevated oil prices, which are increasing inflationary risks and reinforcing expectations that the Bank of England will keep interest rates higher for longer.

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Technical Analysis

On the H4 GBP/USD chart, the market is moving lower towards 1.3380. A wide consolidation range is forming around the 1.3468 level. An upside breakout from this range would open the way for a move towards 1.3520, while a downside breakout would suggest a decline towards 1.3380, with scope for the trend to extend to 1.3222. The MACD indicator supports this scenario, with its signal line above zero and pointing firmly downwards, reflecting continued bearish momentum.

On the H1 chart, the market has formed a compact consolidation range around the 1.3468 level, currently extending down to 1.3414. A move higher towards 1.3455 is expected, followed by a decline to 1.3380. The Stochastic oscillator confirms this scenario, with its signal line below 80 and pointing downwards towards 20, indicating increasing short-term downside pressure.

Conclusion

Sterling has retreated as markets digest the transition of power to Prime Minister Andy Burnham, who has reaffirmed fiscal discipline while signalling a possible increase in the tax-free allowance. Investors are now focused on the appointment of the new Chancellor, with Shabana Mahmood reportedly the frontrunner. Meanwhile, elevated oil prices continue to stoke inflation risks, reinforcing expectations that the Bank of England will maintain higher interest rates for longer. Technically, the pound appears poised for further downside towards 1.3380, with the broader outlook dependent on upcoming fiscal announcements and the trajectory of global energy prices.

 

Disclaimer

Any forecasts contained herein are based on the author’s particular opinion. This analysis may not be treated as trading advice. RoboForex bears no responsibility for trading results based on trading recommendations and reviews contained herein.


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