GBP/USD, DAX Forecast Two trades to watch

GBP/USD holds steady as Middle East tensions ease & post UK CPI

GBP/USD is little changed as FX markets remain relatively muted compared with the larger moves seen in equities and commodities. Investors are weighing the latest UK inflation data alongside developments in the Middle East.

UK inflation remained unchanged at 3.0%, in line with expectations, while core CPI edged slightly higher to 3.2%, above the 3.1% forecast.

However, this data relates to February and had limited market impact, as it does not yet reflect the sharp rise in energy prices seen since the start of March.

Markets are now pricing in around 68 basis points of tightening by December — just over two fully priced rate hikes. However, this is down from almost four rate hikes earlier this week as falling oil prices have eased concerns over inflation.

Gilt yields are also moving lower as oil prices decline. The 10-year gilt yield is currently around 4.81%, down from a high of 5.1% on Monday, when markets were pricing in significantly more aggressive BoE tightening.

The US dollar is holding steady as investors digest the latest headlines surrounding efforts to secure a ceasefire in the Middle East.

The limited movement in the dollar suggests investors remain cautious about Trump’s diplomatic efforts, especially as Tehran has denied any direct negotiations.

There also appears to be some headline fatigue setting in, particularly in currency markets.

Markets are no longer expecting the Fed to cut rates this year, with Fed funds futures implying around a 26% chance of a 25 basis point hike by December — down sharply from 70% a week ago.

Attention will remain firmly on developments in Iran, with any more concrete signs of de-escalation likely to weigh on the US dollar.

GBP/USD forecast – technical analysis

GBP/USD trades within a falling channel dating back to late January. The price recently found support at 1.3225 and rebounded higher, testing the 200 SMA and the upper band of the falling channel at 1.3435. The RSI is neutral.

Should momentum pick up, buyers will look to break above 1.3435 to create a higher high and expose the 50 SMA at 1.3510. Above here 1.3575, the February 26 high comes into play.

Failure to rise above the 200 SMA could see the price fall back to test 1.3350, the January low. Below here attention turns back to 1.3225.

DAX rise on US-Iran ceasefire hopes

The DAX, along with its European peers, is rebounding by around 1% on Wednesday amid optimism that tensions in the Middle East could begin to ease. However, concerns over the broader economic impact of the conflict may keep gains limited.

The US is reportedly pursuing diplomatic avenues to end the war in Iran and has allegedly sent a 15-point settlement proposal, although Tehran continues to deny that direct talks have taken place.

These developments are helping to overshadow concerns of further escalation after President Trump ordered 2,000 troops to the region. Markets remain highly headline-driven.

While the Strait of Hormuz remains effectively closed, Iran has said it will allow non-hostile vessels to pass through — a sign that tensions may be easing slightly.

Oil prices have slipped back below $100, although the longer-term effects of the recent spike are likely to take time to feed through into the economy.

Travel and leisure stocks, which had come under pressure earlier in the month, are outperforming, with airlines rising more than 2.5%. Banks are also gaining.

That said, there remains considerable scepticism over the credibility of US claims, and markets will want to see more tangible evidence that a ceasefire is genuinely taking shape.

The key focus remains on the Strait of Hormuz, which would need to fully reopen for oil prices to fall meaningfully further.

DAX forecast - technical analysis

The selloff in the DAX found support at 21,860, and rebounded higher, pulling the RSI out of oversold territory. The long lower wick on Monday’s candle suggests that there was little selling demand at the lower price. The rebound is testing resistance at 23,000.

A rose above 23,000 opens the door to 23,400, the September low. Should buyers push above here, it exposes the 200 SMA at 24,150.

On the downside, support is seen at 22,500 round number ahead of 21,860, the 2026 low.