GBP/USD pulls back from 1.3485 as fragile ceasefire clouds outlook
- The US-Iran two-week ceasefire sent the US Dollar tumbling, but cracks in the deal are already showing as Israel continues strikes in Lebanon.
- The FOMC's March minutes showed most officials still expect one rate cut this year, though upside inflation risks from tariffs and oil have risen.
- Thursday's core PCE, GDP and jobless claims data will set the tone ahead of Friday's March CPI print.
GBP/USD surged more than 1% on Wednesday after the US and Iran agreed to a Pakistan-brokered two-week ceasefire, pushing Cable to a session high close to 1.3485. The rally faded through the North American session, however, with the pair slipping back to the 1.3400 region as doubts over the deal's durability mounted. Vice President JD Vance described the agreement as a "fragile truce," and Israel launched its largest assault on Lebanon since the war began, declaring the Hezbollah front excluded from the terms.
On the Pound Sterling side, Wednesday's UK data painted a soft picture. Halifax house prices fell 0.5% MoM in March against expectations of a 0.1% gain, while the S&P Global Construction Purchasing Managers Index (PMI) dropped to 45.6, well below the prior 44.5 reading. The Royal Institution of Chartered Surveyors (RICS) housing price balance plunged to negative 23%, its weakest since early 2024.
The Federal Reserve's (Fed) March meeting minutes, released Wednesday evening, confirmed that the Federal Open Market Committee (FOMC) voted 11 to 1 to hold the federal funds rate at 3.50% to 3.75%. Officials flagged rising near-term inflation expectations driven by oil prices and tariffs, while most judged it too early to know how the conflict in the Middle East would affect the US economy. The median projection still calls for one 25 basis point cut this year, but several members noted that a rate hike could be appropriate if inflation stays above target.
Thursday brings the Bank of England's (BoE) Q1 Credit Conditions Survey, though higher-impact releases sit firmly on the US side of the docket. Thursday's core Personal Consumption Expenditures (PCE) Price Index for February, fourth-quarter Gross Domestic Product (GDP), and weekly initial jobless claims will be closely watched, followed by Friday's March Consumer Price Index (CPI) and the University of Michigan's (UoM) preliminary April consumer sentiment and inflation expectations readings.
GBP/USD 15-minute chart
Technical Analysis
In the 15-minute chart, GBP/USD trades at 1.3399. The pair holds a modest bullish intraday bias as it trades above the 200-period exponential moving average (EMA) at 1.3354, keeping the latest rebound supported while short-term momentum remains constructive. The Stochastic RSI at around 81 sits in overbought territory, hinting that upside follow-through may slow even as the broader near-term structure stays underpinned above the 200-period EMA.
On the downside, initial support is located at the 200-period EMA at 1.3354, where a break lower would signal fading bullish pressure and expose deeper pullbacks toward prior intraday lows. As long as GBP/USD respects this moving average on dips, buyers are likely to defend the current consolidation, while overbought oscillators warn that fresh highs may attract profit-taking rather than a sustained breakout.
(The technical analysis of this story was written with the help of an AI tool.)
Pound Sterling FAQs
The Pound Sterling (GBP) is the oldest currency in the world (886 AD) and the official currency of the United Kingdom. It is the fourth most traded unit for foreign exchange (FX) in the world, accounting for 12% of all transactions, averaging $630 billion a day, according to 2022 data. Its key trading pairs are GBP/USD, also known as ‘Cable’, which accounts for 11% of FX, GBP/JPY, or the ‘Dragon’ as it is known by traders (3%), and EUR/GBP (2%). The Pound Sterling is issued by the Bank of England (BoE).
The single most important factor influencing the value of the Pound Sterling is monetary policy decided by the Bank of England. The BoE bases its decisions on whether it has achieved its primary goal of “price stability” – a steady inflation rate of around 2%. Its primary tool for achieving this is the adjustment of interest rates. When inflation is too high, the BoE will try to rein it in by raising interest rates, making it more expensive for people and businesses to access credit. This is generally positive for GBP, as higher interest rates make the UK a more attractive place for global investors to park their money. When inflation falls too low it is a sign economic growth is slowing. In this scenario, the BoE will consider lowering interest rates to cheapen credit so businesses will borrow more to invest in growth-generating projects.
Data releases gauge the health of the economy and can impact the value of the Pound Sterling. Indicators such as GDP, Manufacturing and Services PMIs, and employment can all influence the direction of the GBP. A strong economy is good for Sterling. Not only does it attract more foreign investment but it may encourage the BoE to put up interest rates, which will directly strengthen GBP. Otherwise, if economic data is weak, the Pound Sterling is likely to fall.
Another significant data release for the Pound Sterling is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period. If a country produces highly sought-after exports, its currency will benefit purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.
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