GBP/USD gains are limited as the Iran situation remains fluid

US-Iran peace talks collapse
Iran is considering ending its uranium enrichment programme
Trump blockades Iran ports, sending oil prices higher
GBP/USD holds above the 200 SMA

The pound is holding onto recent gains on Monday but struggles to extend the move northwards, as U.S.-Iran talks over the weekend failed to deliver a breakthrough and prompted a strong response from President Trump. However, reports that Iran may be considering ending its uranium enrichment programme — a key U.S. condition for a broader agreement — have helped stabilise sentiment.

Overall market mood has improved slightly but remains mixed. While there are tentative signs of diplomatic progress, the situation remains highly fragile. The U.S. has now begun a naval blockade in the Strait of Hormuz, targeting Iranian-flagged vessels and further tightening global oil supply. The move is expected to remove up to 2 million barrels per day from the market, reinforcing upward pressure on energy prices.

The U.S. dollar index is broadly steady after five consecutive days of losses, supported by renewed safe-haven demand amid escalating geopolitical tensions and rising oil prices.

Recent U.S. data showed existing home sales fell to a nine-month low of 3.98 million in March, down 3.6% from February, pointing to ongoing softness in the housing market.

Looking ahead, attention will turn to U.S. PPI data, which is expected to show further price pressures and comes following CPI inflation of 3.3% year-on-year. This supports the view that the Federal Reserve is likely to keep interest rates unchanged through 2026.

In contrast, markets are pricing in further tightening from the Bank of England, with expectations of rate hikes driven by elevated energy prices. However, Governor Andrew Bailey has cautioned that markets may be getting ahead of themselves, suggesting policymakers will wait to assess any second-round inflation effects.

The divergence between a steady Fed and a potentially more hawkish Bank of England could provide support for GBP/USD. However, persistent geopolitical uncertainty and a fragile risk environment are likely to keep gains in check for now.

GBP/USD forecast technical analysis

GBP/USD traded in a descending channel from the 1.3870 to the 2026 high, falling to support at the 1.32 support zone. From here, the price recovered, rising out of the falling channel and rising above the 200 SMA to a peak of 1.3485 before easing back to test the 200 SMA at 1.3410. The move above the 200 SMA, combined with the RSI above 50, keeps buyers hopeful of further gains.

Buyers will look to rise above 1.3470, the April high, to bring 1.3575, the late February high, into focus and 1.36. Above here, attention turns to 1.37 and towards 1.3870.

Selles need to close below the 200 SMA at 1.3410 to open the door to the 1.3350 support zone, the January low. Below here attention turns to 1.32.

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