GBP/USD jumps after Trump retracts threats of strikes on Iranian infrastructure

GBP/USD Sees Strong Recovery

The GBP/USD currency pair climbed approximately 0.5% on Monday, rebounding from an early session low near 1.3260 and finishing the day close to 1.3430. The wide trading range resulted in a pronounced lower shadow on the candlestick chart, indicating renewed buying interest below the 1.3300 level as the pair continued its rebound from mid-March lows around 1.3240. Currently, the price is consolidating just beneath the session peak near 1.3480.

Market Drivers: Geopolitics and Central Bank Policy

Oil prices dropped sharply and risk-sensitive currencies gained after President Trump announced a five-day suspension of planned strikes on Iran’s energy infrastructure. This decision followed reports of discussions between US and Iranian representatives over the weekend, though Iranian officials denied any direct talks. The easing of geopolitical tensions allowed the British Pound to recover following a volatile week shaped by the Bank of England’s (BoE) unexpectedly hawkish stance. The Monetary Policy Committee (MPC) unanimously voted to maintain interest rates at 3.75% last Thursday, surprising markets that had anticipated a split vote. All four members who previously favored a rate cut shifted to support holding rates steady. The BoE also cautioned that ongoing conflict in the Middle East could push UK CPI inflation to between 3% and 3.5% by the third quarter, prompting markets to price in roughly 65 basis points of tightening for 2026.

Upcoming Economic Data

Looking ahead to Tuesday, the release of flash S&P Global Purchasing Managers’ Index (PMI) figures for March will be a key focus for both the UK and US. The UK’s manufacturing PMI is projected at 51.1, slightly lower than the previous 51.7, while services PMI is expected to ease to 53.0 from 53.9. Any further decline could challenge the market’s hawkish expectations for the BoE. On the US side, the Federal Reserve kept rates steady between 3.50% and 3.75% last week, with projections still indicating a single rate cut this year. Consensus estimates for US flash manufacturing and services PMIs are 51.6 and 51.7, respectively.

GBP/USD 1-Hour Chart Overview

Technical Outlook

On the 1-hour timeframe, GBP/USD is trading at 1.3430. The short-term trend remains modestly bullish, as the price stays above the 200-period EMA near 1.3350. This suggests that the recent upward movement from the 1.3270 area is intact within a short-term rising channel. The Stochastic RSI is holding at elevated levels, reflecting ongoing positive momentum and signaling that buyers continue to absorb pullbacks above dynamic support.

• Support: The first support is at 1.3400. A drop below this level would expose the 200-period EMA at 1.3350, followed by the previous swing low at 1.3270.
• Resistance: Initial resistance is seen at 1.3450. A sustained break above this level could pave the way for a move toward 1.3500.

As long as GBP/USD remains above 1.3350, the technical setup favors further gains. However, a decisive break below this threshold would indicate a loss of bullish momentum and could lead to a broader consolidation phase.

(This technical analysis was prepared with the assistance of AI tools.)