Pound Sterling weakens as Middle East tensions escalate
The GBP/USD pair faces selling pressure after registering modest gains in the previous day, trading near 1.3400 during the Asian session on Tuesday. The risk-sensitive pair weakens amid rising risk aversion as US-aligned Gulf states move closer to direct involvement in the Iran conflict, with Saudi Arabia signaling a potential military shift, according to a Wall Street Journal report.
Israel launched its latest attack on Iran despite US President Donald Trump signaling a pause in strikes on energy infrastructure after what he described as productive talks with Tehran. However, Iran’s Foreign Minister Abbas Araghchi denied any engagement with Washington. Iranian Parliament Speaker Mohammad Bagher Ghalibaf also said on Monday that no negotiations had taken place with the US. Meanwhile, senior military adviser Mohsen Rezaei stated that the conflict would persist until Iran receives full compensation for the damage incurred. Read more…
GBP/USD surges as Trump walks back threatened Iranian infrastructure strikes
GBP/USD rallied about 0.5% on Monday, recovering from an early dip near 1.3260 to trade around 1.3430 by the end of the session. The wide-range day left a long lower wick, suggesting fresh demand emerged below the 1.3300 handle as the pair extended its recovery from the mid-March low close to 1.3240. Price is now consolidating just below the session high near 1.3480.
President Trump’s decision to pause planned strikes on Iran’s power plants and energy infrastructure for five days sent oil prices sharply lower and lifted risk-sensitive currencies across the board. The move followed reports of weekend talks between US envoys and Iranian officials, though Tehran denied any direct negotiations had taken place. The de-escalation signal gave the Pound Sterling room to recover after a turbulent week dominated by the Bank of England’s (BoE) hawkish hold. The Monetary Policy Committee (MPC) voted unanimously to keep rates at 3.75% on Thursday, a more hawkish outcome than the 7-2 split markets had expected, as all four members who voted for a cut in February switched to a hold. The BoE warned that the Middle East conflict could push Consumer Price Index (CPI) inflation to 3% to 3.5% by Q3, and markets repriced aggressively, now discounting around 65 basis points of tightening in 2026. Read more…
GBP/USD rises as Trump signals Iran de-escalation, US Dollar sinks
The Pound Sterling (GBP) appreciates sharply against the US Dollar (USD) on Monday after US President Donald Trump postponed further military action against Iran, adding that talks between the two countries were productive and could end hostilities in the Middle East. At the time of writing, GBP/USD trades at 1.3459, up by more than 0.90%.
The Greenback is on the back foot as depicted by the US Dollar Index (DXY). The DXY, which measures the performance of the buck’s value against six other currencies, is down 0.54% to 98.97, a tailwind for Sterling. Read more…
