GBP/USD surges as Trump walks back threatened Iranian infrastructure strikes
- The Pound Sterling rallied back above 1.3400 after ceasefire hopes lifted risk sentiment ahead of Tuesday's flash PMIs.
- Trump postponed US strikes on Iranian energy infrastructure for five days, citing "productive conversations" with Tehran; oil prices dropped sharply, and risk assets rallied across the board on Monday.
- Flash UK and US S&P Global PMIs for March land on Tuesday, with UK February CPI data on Wednesday providing the week's key Cable inflation test.
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.
On Tuesday, flash S&P Global Purchasing Managers' Index (PMI) data for March headlines the calendar on both sides of the pair. UK manufacturing PMI is expected at 51.1, down from 51.7, with services forecast at 53.0 versus 53.9 previously; any further softening would test the hawkish BoE repricing. On the US Dollar (USD) side, the Federal Reserve (Fed) held rates at 3.50% to 3.75% last week with the dot plot still pointing to one cut this year. US flash manufacturing PMI consensus sits at 51.6, with services at 51.7.
GBP/USD 1-hour chart
Technical Analysis
In the 1-hour chart, GBP/USD trades at 1.3430. The near-term bias is mildly bullish as price holds above the 200-period EMA near 1.3350, confirming that the recent upswing from the 1.3270 region is being sustained within a short-term upward structure. Stochastic RSI remains anchored in elevated territory, indicating persistent positive momentum rather than an imminent exhaustion signal, which keeps the focus on dips being absorbed above the dynamic support area.
Immediate support aligns at 1.3400, with a break below exposing 1.3350 at the 200-period EMA, followed by the prior reaction low at 1.3270. On the topside, initial resistance emerges at 1.3450, with a sustained move above this barrier opening the way toward 1.3500 as the next upside objective. As long as the pair holds above 1.3350, the technical framework favors continuation of the advance, while a clear violation of that level would signal a loss of bullish control and a shift toward a broader consolidation phase.
(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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