GBP/USD rises as Trump signals Iran de-escalation, USD sinks

• GBP/USD climbs above 1.3450 as Trump hints productive Iran talks could end hostilities.
• DXY falls 0.54% to 98.97 while weaker Oil prices sap Dollar support.
• Markets price BoE tightening risk as Fed officials stay cautious on inflation outlook.

The Pound Sterling appreciates sharply against the US Dollar on Monday after US President Donald Trump delayed 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, the GBP/USD trades at 1.3459, up by more than 0.90%.

Sterling rallies nearly 1% as easing war fears hit Oil prices and drag the Greenback lower

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% down at 98.97, a tailwind for Sterling.

Trump posted on its Truth Social Network that the US and Iran had "VERY GOOD AND PRODUCTIVE" talks. Nevertheless, Iran's media reported that there was no direct or indirect contact between Washington and Tehran.

Given the backdrop, the financial markets cheered Trump's post, with Wall Street opening in the Green, while Oil prices tumbled, dragging the Greenback lower.

Nevertheless, comments by IEA Director Fatih Birol that the current crisis in the Middle East has had a worse impact than the other two Oil shocks of the 1970s combined, and the effects on gas markets from the Russia-Ukraine war.

Meanwhile, major central banks, which were in an easing cycle, kept interest rates steady last week, fueling uncertainty about the impact of the Middle East war.

Money markets had priced in a rate hike by the Bank of England at the June 18 meeting, with odds standing at 52%. Regarding the Federal Reserve, the swaps market is not expecting a rate cut; it is pricing 5 basis points of tightening for the June 17 reunion.

Fed officials are concerned about energy prices

The Chicago Fed President, Austan Goolsbee, said he remains optimistic that rates could move lower by the end of 2026, but he needs "proof on inflation." He added that inflation now seems a greater risk, noting that he's trying to understand how long it will take for high Oil prices to impact the economy.

Recently, Fed Governor Stephen Miran said the Fed shouldn't make policy based on short-term headlines, and added that the balance of risks had worsened on both sides.

GBP/USD Price Forecast: Technical Outlook

In the daily chart, GBP/USD trades at 1.3381. The near-term bias is mildly bearish as price holds below the confluence of the triple simple moving averages clustered around 1.35, while the recent break under the long-running ascending support line from 1.3035 leaves the pair trading within the grip of the descending resistance line from 1.3869. The move away from that broken rising trend line signals fading upside momentum, and repeated failures along the downward-sloping resistance line keep rallies contained, reinforcing pressure toward recent lows.

Initial resistance stands near 1.3430, aligning with last week’s swing high, followed by the 1.3500/1.3510 zone where the grouped moving averages cap the upside and meet the descending trend line. A break above that area would be needed to ease the bearish tone and expose 1.3600 next. On the downside, immediate support emerges at 1.3340, ahead of 1.3220, which marks the latest significant trough and a key level for preserving the broader range. A decisive drop below 1.3220 would confirm renewed downside extension toward the 1.3100 area.

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