GBP/USD Price Forecast: Reclaims two-week high around 1.3445 as sentiment improves

• The Pound Sterling gains against the US Dollar as the latter plummets amid risk-on sentiment.
• A two-week ceasefire between the US and Iran has improved the market mood.
• Traders have priced out interest rate hikes by the Fed for this year.

The Pound Sterling surges against the US Dollar (USD) on Wednesday as the market sentiment turns favorable for riskier assets, is up 1% to near 1.3445 during the early European session. The announcement by United States (US) President Donald Trump that he has suspended planned attacks on Iran’s power plants, following Tehran’s agreement to reopen the Strait of Hormuz for two weeks, has boosted the risk-on impulse.

S&P 500 futures gain over 2.7% in the European trade, reflecting strong demand for risk-sensitive assets. The US Dollar Index (DXY), which tracks the greenback’s value against six major currencies, trades 0.75% lower to near 98.75.

The US Dollar faces intense selling pressure as its safe-haven demand has diminished, and traders have pared bets supporting interest rate hikes by the Federal Reserve (Fed) this year. According to the CME FedWatch tool, traders have priced out the possibility of the Fed delivering an interest rate hike this year, a sharp turnaround from at least one hike projected after the war started on February 28.

In Wednesday’s session, investors will focus on the US Federal Open Market Committee (FOMC) minutes of the March policy meeting, which will be published at 18:00 GMT. The impact of the FOMC minutes on the US Dollar is expected to be limited as remarks on the outlook for the economy and inflation by policymakers were majorly influenced by Middle East war risks.

GBP/USD technical analysis

During the press time, the GBP/USD pair trades higher at around 1.3445. The pair has reclaimed the 20-day exponential moving average after a prolonged spell below it, shifting the near-term bias to cautiously bullish, as price stabilizes above the recent congestion area around 1.3350. The reclaim of the average coincides with improving momentum, with RSI lifting to 56 from below 50, signaling building upside pressure after the late-March lows. This combination points to buyers regaining control while the broader structure still reflects a recovery phase rather than a fully established uptrend.

Initial resistance emerges at the March 23 high of 1.3480, with a break opening the path toward 1.3600 as the next upside objective. On the downside, immediate support stands at the 20-day EMA, and a close below this area would neutralize the current bullish tone and expose the 1.3300 region. As long as spot holds above 1.3370, the technical backdrop favors extensions higher toward 1.3480 and beyond.

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