The British pound climbed to a six-week high near 1.3515 against the US dollar in early Asian trading on Tuesday, as global markets shifted toward risk-oriented assets amid renewed optimism over potential progress in US–Iran talks.
Pound gains as dollar weakens and risk appetite improves
The move in sterling came alongside broad-based weakness in the US currency. The US Dollar Index fell to around 98.30, its lowest level in six weeks, extending a slide triggered by softer-than-expected US inflation data.
The latest report from the Bureau of Labor Statistics showed core US consumer prices rose 0.2% in March, below the 0.3% consensus forecast. The data eased pressure on the Federal Reserve to maintain an aggressive policy stance and encouraged flows out of traditional safe havens and into higher-risk assets.
S&P 500 futures traded broadly flat on Tuesday after gaining more than 1% on Monday, suggesting a pause in the initial risk-on surge but no clear reversal in sentiment.
US–Iran developments underpin risk sentiment
Risk appetite was supported by signs of possible diplomatic progress between Washington and Tehran.
At a press conference on Monday, US President Donald Trump said the opposing side in current discussions “wanted a deal” and confirmed the start of a blockade of Iranian ports. Earlier, Vice President Vance described talks with Iranian envoys in Pakistan as “productive,” while cautioning that further progress would depend on Tehran’s response.
Hopes of de-escalation in the region encouraged capital flows into assets more sensitive to global liquidity and risk conditions, weighing on the dollar and boosting currencies such as the pound.
Focus shifts to Bank of England’s Bailey
Attention in the United Kingdom now turns to Bank of England Governor Andrew Bailey, who is due to speak on a panel at Columbia University at 16:05 GMT. Traders will monitor his remarks for guidance on the path of UK interest rates into the second quarter of 2026.
The speech comes as UK consumer price inflation has eased to 3.4% year-on-year, still well above the Bank’s 2% target. At the same time, the latest data from the Office for National Statistics show the economy expanded only 0.1% in the most recent quarter.
Bailey is therefore seen as balancing two competing priorities: bringing inflation back to target and supporting a fragile growth backdrop. Any signal that he is prepared to lean more heavily against inflation could reinforce the pound’s gains, while a more growth-focused, dovish tone could quickly cap or reverse the current rally.
Technical picture for GBP/USD
On the charts, GBP/USD traded around 1.3515 after breaking through resistance at 1.3500. The pair remains above the 20-day exponential moving average, now near 1.3373, suggesting the recent upward momentum is intact.
The Relative Strength Index is approaching 60, pointing to ongoing bullish pressure in the near term. A sustained move below the 20-day moving average would hint at a short-term correction, while holding above it keeps the upside bias toward the February peaks around 1.3575 and 1.3713.
Potential volatility around Bailey’s remarks
Bailey, who has led the Bank of England since March 2020 after serving as chief executive of the Financial Conduct Authority and holding several senior roles at the central bank, is seen as the next key catalyst for sterling.
A hawkish message that underscores inflation control and keeps rate-cut expectations in check could push GBP/USD closer to its February highs and reinforce the broader trend of US dollar weakness. Conversely, any emphasis on supporting growth or signaling an earlier easing cycle could undercut the pound and expose the current rally to a sharper pullback.
Broader market view
The present move in currencies and equities rests heavily on shifting geopolitical headlines and evolving rate expectations. While the risk-on mood has so far benefited the pound at the expense of the dollar, both the US–Iran narrative and the policy outlook from a major G7 central bank remain fluid.
Traders will be watching Bailey’s comments closely as a potential inflection point for sterling and for confirmation of whether the current phase of dollar weakness has further to run or is vulnerable to a rapid reversal.
Curious how traditional markets compare with crypto? Explore key differences in TradFi vs DeFi and sharpen your macro strategy.
Disclaimer: The content on this page is provided for general informational purposes only and does not represent the views or financial advice of Toobit. We make no guarantees regarding the accuracy or completeness of this information and shall not be held liable for any errors, omissions, or outcomes resulting from its use. Investing in digital assets involves risk; users should independently evaluate their financial situation and the risks involved. For further details, please consult our Terms of Service and Risk Disclosure.
