GBP/USD rose in Monday’s North American session, gaining 0.19% as US-Iran talks stalled and US equities traded lower. The pair traded at 1.3548 after rebounding from an intraday low of 1.3506.
Later on Monday, GBP/USD traded near 1.3565, up 0.23% on the day, supported by a softer US Dollar amid improving risk appetite. Reports referred to an Iranian proposal linked to reopening the Strait of Hormuz and ending the conflict with the United States.
Market Session Recap
In the Asian session, GBP/USD drew dip-buying interest near the 1.3500 psychological level and climbed to a more than one-week high. It traded just below the mid-1.3500s, up 0.10% on the day, with 1.3600 cited as an upside target.
The FXStreet content team, made up of economic journalists and FX specialists, produces and oversees FXStreet’s published content. It states its coverage follows a journalistic approach to the foreign exchange market.
We recall that back in early 2025, there was brief optimism when GBP/USD tested the 1.3550 level, driven by hopes surrounding US-Iran talks. That period was defined by a fragile market mood where geopolitical headlines could shift the currency significantly. Today, with the pair trading much lower around 1.2720, that volatility serves as a key reminder of how external factors influence the market.
Given the current environment, where the Bank of England is cautiously watching UK inflation hover just above target at 2.1%, implied volatility in GBP/USD options is an important metric. The instability we saw last year shows that buying straddles could be a strategy to trade potential price swings in the coming weeks, especially ahead of central bank meetings. This would allow us to profit from a significant move without betting on a specific direction.
Options And Hedging
Unlike last year’s focus on the 1.3600 target, the current resistance level for the pair seems firmly capped near 1.2800. With the latest US jobs report showing a healthy addition of over 250,000 payrolls, the dollar’s fundamental strength appears more resilient than it did during the temporary peace hopes of 2025. We might therefore consider buying out-of-the-money put options with a strike price near 1.2600 to position for potential downside.
Looking back, the market’s singular focus on geopolitics in 2025 seems narrow compared to today’s broader economic concerns over divergent central bank policies. We see that while risk premiums from specific events can fade, persistent inflation remains a primary driver. For those with sterling-denominated assets, using futures contracts to hedge against a sustained break below 1.2700 remains a prudent approach.
