The GBP/USD pair is trading above the round 1.3400 level. The U.S. dollar is attracting new buyers following yesterday's correction from a three-month high and remains the main factor putting pressure on the GBP/USD pair. Investors are awaiting further developments in the Middle East.

Investors fear that rising energy prices could reignite inflation and delay the easing of policy by the U.S. Federal Reserve. This supports higher yields on U.S. Treasury bonds, further strengthening the dollar and limiting gains in GBP/USD. However, the British pound is receiving support from a reassessment of interest-rate expectations.

Market participants may wait for a speech by Bank of England Governor Andrew Bailey on Thursday, which could set a new tone for market sentiment.

Investors will also focus on U.S. inflation data this week—the Consumer Price Index (CPI) and the Personal Consumption Expenditures (PCE) index—as well as the UK's monthly GDP data, all of which may influence the dynamics of the GBP/USD pair. However, geopolitical news continues to dominate, driving market volatility and shaping the trajectory of the U.S. dollar.

From a technical perspective, oscillators on the daily chart are negative, indicating an advantage for the bears. Nevertheless, the pair is attempting to break above the very important 200-day SMA, located around 1.3445. A successful break above this level would shift the current trading range and allow bulls to challenge the 20-day SMA near the round 1.3500 level.

The main support lies at the 1.3400 round level. If this level fails to hold, prices could accelerate their decline toward the 1.3300 round level.