GBP/USD climbed to 1.3599 on Thursday, with sterling testing its highest levels since mid-February during the previous session. The pound continues to gain support from weakening demand for the US dollar as a safe-haven asset amid growing optimism surrounding a possible agreement between the US and Iran.
According to Axios, the White House is close to signing a framework memorandum with Iran that could pave the way for ending the conflict and launching nuclear negotiations. Tehran’s response is expected within the next 48 hours, although a final agreement has yet to be secured.
Investors are also closely monitoring local elections in the United Kingdom, where opinion polls suggest that Keir Starmer’s party could face notable losses.
On the monetary policy front, expectations for the Bank of England have shifted slightly. Markets are currently pricing in around 50 basis points of tightening by the end of the year, equivalent to two rate increases. Previously, investors had anticipated as many as three hikes.
Technical Analysis
On the H4 chart, GBP/USD is trading within a broad consolidation range above 1.3515, currently extending towards 1.3650. A corrective move lower towards 1.3344 remains possible. After this correction, the pair may consolidate again. A breakout higher would reopen the path towards 1.3650, while a downside move could extend losses towards 1.3344. The MACD indicator supports this scenario, with the signal line above zero and pointing firmly lower, indicating fading bullish momentum.
On the H1 chart, GBP/USD is trading within a compact consolidation range around 1.3615. The range has extended lower towards 1.3578, with the pair attempting to rebound towards 1.3615 as a retest from below. After that, another decline towards 1.3565 may follow. The Stochastic oscillator confirms this outlook, with the signal line below 50 and pointing downwards towards 20, signalling increasing short-term downside pressure.
Conclusion
Sterling remains supported by improving global risk sentiment and reduced demand for the US dollar as a defensive asset. However, political uncertainty in the UK and shifting expectations around Bank of England policy could limit further upside. In the near term, GBP/USD is likely to remain highly sensitive to geopolitical headlines and broader market sentiment.
