British Pound holds firm as US-Iran tensions boost Greenback

• US-Iran talks stall as ceasefire risks intensify over weekend.
• ISM Manufacturing hits four-year high, supporting Dollar strength.
• BoE Bailey remarks, and UK hearings headline domestic calendar.

The Pound Sterling steadies on Monday as speculation of a peace deal between the US and Iran fades, following weekend exchanges of fire that are a headwind for GBP/USD, which trades near 1.3445 at the time of writing.

GBP/USD slips as renewed geopolitical risks lift haven Dollar demand

Market mood shifted neutrally after an upbeat close last week. Negotiations between the US and Iran seem to have halted as “Iran stops exchanging messages with the US in protest against Zionist crimes,” reported Tasnim. Breaking news revealed that Iran’s State TV said that the probability of the ceasefire ending between both parties is high if Israel’s attack on Lebanon doesn’t stop.

Consequently, the Greenback extends its gains, with the US Dollar Index (DXY), which measures the buck's performance against a basket of six currencies, up 0.34% at 99.27.

The economic data dump in the US began with the ISM Manufacturing PMI rising to its highest level in four years, as businesses front-loaded orders to avoid price increases. The index rose to 54.0 in May, up from 52.7 in April. The sub-component of prices paid dipped from 84.6 in April to 82.1.

The report is positive for the US economy, though geopolitical uncertainty boosted the Dollar's haven appeal. Traders' eyes would be on Friday’s Nonfarm Payroll figures for May, along with other jobs data, the ISM Services PMI and speeches by Federal Reserve officials.

In the UK, the economic docket was absent, but traders are eyeing remarks from the Bank of England Governor Andrew Bailey and the BoE Monetary Policy Report Hearings on Wednesday.

The Pound has been underpinned by money market expectations, with traders expecting nearly 42 basis points of tightening towards the end of the year, according to Prime Terminal data.

GBP/USD Price Forecast: Technical outlook

In the daily chart, GBP/USD trades at 1.3454. The pair holds a modest bullish bias as it remains above the cluster of simple moving averages around 1.3447 and continues to respect the broader upward support line drawn from 1.3159, whose break level sits lower near 1.3351. Momentum is constructive but not overextended, with the 14-day Relative Strength Index hovering just under 49, hinting at steady rather than explosive buying interest while price consolidates above its key moving average base.

On the topside, initial resistance is defined by the descending trend-line structure, with its break level projected near 1.3602; a daily close above that barrier would open the door to a more convincing recovery phase. On the downside, immediate support is provided by the grouped simple moving averages around 1.3447, ahead of firmer structural backing at the former trend-line break zone near 1.3351, where buyers would be expected to show up to defend the broader uptrend.

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