GBP/USD rebounded from about 1.3175 in Asian trading on Monday, ending a two-day fall and moving back above 1.3200. Further gains were limited by ongoing geopolitical uncertainty.
Bloomberg, citing Axios, said the US, Iran and regional mediators are discussing terms for a possible 45-day ceasefire that could lead to an end of fighting. This report weighed on the safe-haven US dollar and supported the pair, though US President Donald Trump threatened to target Iran’s power plants and bridges if the Strait of Hormuz is not reopened by Tuesday.
Technically, the pair remains below the 200-period simple moving average (SMA) on the 4-hour chart, and that SMA is sloping lower. The MACD is flattening just under the zero line with a marginally negative histogram, and the RSI is near 43, below the 50 midline.
Resistance is seen at 1.3240 and 1.3300, with a move above 1.3300 needed to test the 200-period SMA near 1.3370. Support is at 1.3190, and a break could extend losses towards 1.3150.
We remember looking back in 2025 at how geopolitical headlines, like the brief US-Iran ceasefire talks, created sharp but temporary moves in GBP/USD. This taught us that the US Dollar’s safe-haven status can be quickly shaken by perceptions of de-escalation. Those patterns of volatility around geopolitical news serve as a crucial reminder for our current strategies.
Today, the focus has shifted from those past military tensions to a clear economic divergence. The Bank of England has maintained a hawkish stance, holding its key interest rate at 5.25% through the first quarter of 2026. With UK core inflation reported at a stubborn 3.1% for February 2026, the market is pricing out significant rate cuts this year, providing a firm floor for the Pound.
Meanwhile, the US economy is showing signs of softening, a stark contrast to the previous year. The March 2026 non-farm payrolls report came in at 165,000, missing forecasts for the second consecutive month and raising expectations for a Federal Reserve rate cut this summer. This fundamental weakness puts sustained pressure on the US Dollar against currencies with more resilient central bank policy.
For derivative traders, this environment suggests a cautiously bullish outlook on GBP/USD is appropriate. Buying call options with strike prices near the 1.3300 level could be a way to capitalize on further upside driven by this policy divergence. Traders could use the old support level of 1.3150 as a guide for setting stop-losses or purchasing protective puts in case US economic data suddenly strengthens.
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