GBP\/USD opened the week with a bearish gap and moved away from a two-month high near 1.3600 reached on Friday. It later recovered a few pips from a one-week low set in early Asian trade and was just below 1.3500, down over 0.15% on the day.<\/p>\n
Risk sentiment weakened amid renewed US-Iran tensions over the Straight of Hormuz, supporting the safe-haven US Dollar and weighing on the pair. Iran closed the waterway after briefly reopening it at the weekend, following a US naval blockade of Iranian ports, with the current ceasefire due to end on April 21.<\/p>\n
Iran\u2019s IRNA news agency reported on Sunday that Iran would not join a second round of talks with the US. US President Donald Trump said he would target every power plant and every bridge in Iran if Tehran did not accept Washington\u2019s terms, adding to escalation risks.<\/p>\n
Crude Oil prices rallied, raising inflation concerns and pushing US bond yields higher, which supported the dollar. The dollar\u2019s gains were limited by lower odds of a US Federal Reserve rate rise, while markets priced in a Bank of England rate rise, supporting sterling.<\/p>\n
Looking back at the geopolitical flare-up from this time last year, we can see the market\u2019s classic knee-jerk reaction to conflict. The immediate safe-haven bid for the US dollar created a clear, short-term opportunity for derivative traders. The bearish gap in GBP\/USD below 1.3500 was a strong signal.<\/p>\n
In response to such events, traders should consider buying short-dated put options on GBP\/USD to capitalize on the downward momentum and rising fear. We saw implied volatility on the pair spike over 25% during that week in April 2025, which also made selling call spreads an effective, risk-defined strategy. This is a playbook for profiting from sudden risk-off sentiment.<\/p>\n
The spike in crude oil, driven by the closure of the Strait of Hormuz, presented another direct trading opportunity. Buying call options on oil futures or energy sector ETFs would have been the most direct way to trade the escalation. Indeed, historical data shows Brent crude futures jumped nearly 10% in the 48 hours following that weekend’s news.<\/p>\n
However, the underlying divergence in central bank policy between the Fed and the Bank of England was the more durable trend. While geopolitics caused short-term noise, the expectation of a BoE rate hike versus a neutral Fed provided a floor for the pound. This suggested that any deep, fear-driven sell-off in GBP\/USD would likely be a buying opportunity for longer-term positions.<\/p>\n
That monetary policy outlook ultimately proved correct over the following months, as GBP\/USD recovered and eventually pushed towards 1.3900 by the third quarter of 2025. As of today, April 20, 2026, the Bank of England’s base rate sits at 5.5%, while the Fed Funds Rate is holding at 5.0%. This confirms the divergence we were anticipating last year has fully played out.<\/p>\n
Current data continues to support this theme, as the latest UK inflation reading for March 2026 came in at a persistent 3.1%, keeping pressure on the BoE. Therefore, any new geopolitical tensions that boost the dollar should be viewed as a potential opportunity to enter longer-term bullish positions on the pound. The fundamental monetary policy story remains a more powerful driver than temporary risk events.<\/p>\n
Create your live VT Markets account<\/a>\u00a0and\u00a0start trading<\/a>\u00a0now. <\/b><\/p>\n","protected":false},"excerpt":{"rendered":" GBP\/USD fell after bearish gap as US-Iran tensions boosted dollar, while BoE hike bets supported sterling.<\/p>\n","protected":false},"author":38,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[46],"tags":[],"class_list":["post-45321","post","type-post","status-publish","format-standard","hentry","category-live-updates"],"acf":[],"aioseo_notices":[],"featured_image_src":null,"featured_image_src_square":null,"author_info":{"display_name":"josephine","author_link":"https:\/\/www.vtmarketsglobal.com\/en\/author\/josephine\/"},"_links":{"self":[{"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/posts\/45321","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/users\/38"}],"replies":[{"embeddable":true,"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/comments?post=45321"}],"version-history":[{"count":0,"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/posts\/45321\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/media?parent=45321"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/categories?post=45321"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/tags?post=45321"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}