Over the past 24 to 48 hours, GBP/USD has exhibited notable volatility, fluctuating around yesterday’s closing price of 1.35072. The market reacted strongly to the news of the US-Iran negotiations resuming, as the US President announced a two-week suspension of military operations against Iran. This development boosted risk appetite significantly, driving the pound to rally near and above 1.3400. Meanwhile, the US Dollar Index (DXY) declined to around 98.10 due to waning safe-haven demand, further weakening the dollar and creating room for gains in GBP and EUR.

Specifically, the positive news on US-Iran peace talks eased geopolitical tensions in the Middle East, sharply reducing safe-haven demand for the dollar. Despite weak UK services PMI data revised down to 50.5 — its lowest reading in years — the overall market sentiment remained buoyed by optimism on the diplomatic front, aiding GBP/USD’s climb. Simultaneously, oil prices dropped due to easing geopolitical fears, putting further pressure on the dollar’s haven status.

For the average investor, this scenario resembles a sudden shift from tension to optimism where the demand for the safe-haven US dollar suddenly diminishes. Investors moved towards risk assets like the pound, fueling buying momentum. While this boosted GBP/USD in the short term, investors should remain cautious about potential fluctuations stemming from any future geopolitical developments.

Daily Chart

The daily chart reveals GBPUSD rebounding from below 1.32 in early March, surging past key moving averages like the 50-day SMA (~1.3377) and 200-day SMA (~1.3403) in recent sessions, signaling a structural bullish breakout. Bollinger Bands are widening, indicating growing volatility and room for price extension. The MACD has formed a golden cross, with the fast line crossing above the slow, reinforcing bullish momentum. RSI stands between 60 and 70, not yet overbought, allowing further upward movement. The medium-term trend is bullish, supporting buy-on-dips strategies.

1H Chart

On the hourly chart, GBPUSD shows intensified volatility within the 1.3450 to 1.3550 range over the last 3-5 days. Short-term moving averages, notably the 20 and 50 periods, provide support near 1.35. The MACD remains in positive territory but momentum appears to be moderating, while narrowing Bollinger Bands hint at possible consolidation. A recent bullish engulfing candlestick highlights buyers’ defense and suggests that price may continue to rebound over the next 24 hours, though resistance tests remain crucial.

Technical Trend:  GBPUSD is currently in a cautiously bullish trend with signs of a structural uptrend but short-term consolidation likely.

Technically, GBPUSD shows a confirmed structural breakout on the daily timeframe supported by the MACD golden cross and expanding Bollinger Bands. However, on the hourly chart, momentum is moderating, signaling potential for short-term consolidation or range trading. The recent bullish engulfing candle suggests immediate bullish sentiment remains intact. Market watchers should be alert for retests of support and resistance levels as well as news flow around US-Iran developments impacting the US Dollar Index, which often serves as a major driver for GBPUSD moves.

Today’s economic calendar in GMT+1 features several significant UK inflation releases at 08:00, including Consumer Price Index (CPI), Core CPI, and Retail Price Index — all pivotal for GBPUSD price direction. Stronger-than-expected inflation figures would likely bolster the Pound, while weaker data could weigh on it. Japanese trade figures are also released early in the session but have minimal direct impact on GBPUSD. Overall, UK inflation data is the key event traders should monitor closely for potential GBPUSD moves.

Resistance & Support

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