Pound Sterling recovers versus US Dollar amid positive shift in market mood

Pound Sterling Strengthens Amid Positive Market Sentiment

On Monday, the British Pound saw a notable increase against the US Dollar, climbing by 0.45% to approximately 1.3255 during European trading hours. This upward movement is fueled by a shift toward riskier assets, following Iran's announcement that it is considering a ceasefire proposal from the United States.

As investors become more optimistic, demand for safe-haven assets has waned. At the time of reporting, the US Dollar Index (DXY)—which measures the dollar’s performance against six major currencies—had fallen by 0.35% to around 99.85, after showing slight gains earlier in the Asian session.

During the European session, Iran confirmed receipt of the ceasefire proposal via Pakistan. However, officials in Tehran emphasized that they would not agree to any terms imposed under deadlines or external pressure, and rejected the idea of reopening the Strait of Hormuz in exchange for a "temporary ceasefire."

Previously, Reuters reported that both countries are negotiating a two-stage agreement aimed at ending hostilities by Monday.

Bank of England Policy Outlook

Within the UK, market participants are watching for new signals regarding whether the Bank of England will adjust interest rates at upcoming meetings, especially as conflict continues in the Middle East.

Last week, Bank of England Governor Andrew Bailey told Reuters that the central bank may need to take action if rising oil prices become a significant factor. He stressed, "We will respond if necessary, but addressing the root cause of energy price shocks is crucial," and cautioned that extended energy disruptions could severely impact economic growth.

Upcoming US Economic Data

In the United States, traders are awaiting the release of the ISM Services PMI for March, scheduled for 14:00 GMT. Forecasts suggest the index will decline to 55.0, down from 56.1 recorded in February.