The British pound traded around 1.3565 against the US dollar on Wednesday, holding close to Tuesday’s two‑month high of 1.3590, as hopes for a permanent ceasefire between the United States and Iran supported risk‑focused assets.
Broader risk rally and weaker dollar
Risk sentiment stayed firm in early European trade. Futures linked to the S&P 500 index hovered around 6,970, consolidating Tuesday’s gains and signaling sustained demand for equities.
The US Dollar Index was pinned near a six‑week low around 98.00, reflecting broad dollar weakness as capital moved away from traditional safe havens.
Ceasefire expectations drive mood
US President Donald Trump told ABC he saw no reason to extend the current two‑week ceasefire and believed a lasting agreement could be reached within the next two days. The comments reinforced a view that diplomatic progress may continue in the short term.
The current truce, brokered by Pakistan and agreed on April 8, has eased tensions between Washington and Tehran and underpinned a broad increase in risk appetite. Traders have become more willing to shift capital into higher‑yielding and risk‑sensitive assets, including equities and some currencies.
However, the basis for this optimism remains fragile. Weekend talks in Islamabad aimed at securing a permanent deal ended without a breakthrough, and the ceasefire is due to expire on April 21. That deadline marks a clear potential flashpoint for volatility if no extension or lasting agreement is reached.
Domestic focus on Bailey and UK data
Attention in sterling markets also turned to Bank of England Governor Andrew Bailey, who was scheduled to speak at an International Monetary Fund panel at 15:50 GMT. His remarks, together with fresh UK monthly GDP data due on Thursday, are seen as the next key drivers for the pound’s short‑term direction.
The domestic outlook has darkened. The International Monetary Fund has sharply cut its 2026 UK growth forecast to 0.8%, the steepest downgrade among G7 economies, citing the impact of the Middle East conflict and broader geopolitical uncertainty.
In a speech in New York on Tuesday, Bailey described the geopolitical backdrop as a “large shock” to the global economy with implications for monetary policy, but stressed he would remain in “studious neutrality” regarding the Bank of England’s upcoming interest rate decision.
Technical picture for sterling
From a technical standpoint, the pound maintained an upward structure:
- It traded above the 20‑period exponential moving average at 1.3395.
- It also held above the 50% Fibonacci retracement level at 1.3516.
- The 14‑period relative strength index hovered near 62, signaling ongoing buying momentum, though edging closer to overbought territory.
Key levels on the chart include:
- Support at 1.3516, with additional support near 1.3432, aligning with the 38.2% Fibonacci retracement.
- Immediate resistance at 1.3599, with a break above that zone potentially opening the way toward 1.3718 and 1.3870.
Risk sentiment beyond currencies
The supportive environment for risk has extended beyond traditional markets. Digital assets have shown resilience, with Bitcoin holding near $74,000.
Analysts see this strength as closely linked to shifting expectations around a durable peace arrangement in the Middle East. The path of such volatile assets is likely to hinge on how negotiations evolve in the run‑up to the April 21 ceasefire deadline, with any setback in talks posing a risk of sharp reversals across high‑beta markets.
Looking to profit from shifting FX and crypto trends? Explore this complete forex trading guide to upgrade your 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.
