GBP/USD Climbs as US-Iran Peace Hopes Weigh on Dollar

Traders' Opinions

Summary:

GBP/USD strengthened on Friday as optimism surrounding a potential US-Iran peace agreement weighed on the US Dollar. While weak UK economic data limited enthusiasm for Sterling, softer US inflation signals and improving risk sentiment helped keep the pair near multi-month highs.

BUY GBPUSD

EXP

TRADING

1.34150

Entry Price

1.35000

1.33300

1.34028 -0.00120 -0.09%

0.0

Pips

Flat

1.33300

Exit Price

1.34150

Entry Price

1.35000

The British Pound traded with a firmer tone against the US Dollar on Friday, with GBP/USD climbing toward the 1.3400 region as improving geopolitical sentiment weighed on the Greenback despite disappointing UK economic data.

At the time of writing, the pair was testing the key 200-day Simple Moving Average near 1.3415 after rebounding sharply from Thursday's lows around 1.3300. The move higher was driven primarily by broad US Dollar weakness after signs of progress in negotiations between the United States and Iran improved global risk appetite.

US President Donald Trump said a peace agreement with Iran could be reached within days, while Iranian officials acknowledged that a deal appears closer than before, though with more cautious language. The prospect of easing Middle East tensions reduced demand for safe-haven assets, pressuring the Dollar across the board.

Sterling's gains came despite weak domestic data from the United Kingdom. The Office for National Statistics reported that UK GDP contracted by 0.1% in April after expanding 0.3% in March, reinforcing concerns that the economy remains fragile. Industrial Production was flat, missing expectations for a modest increase, while Manufacturing Production rose 0.4%, offering one of the few positive surprises in the report.

In the United States, Thursday's Producer Price Index data delivered a mixed signal for markets. Headline PPI accelerated to 6.5% year-over-year, its highest level in more than three years, but Core PPI held steady at 4.9%, below expectations. The softer core reading helped ease fears of a broader inflation surge and reduced expectations for additional Federal Reserve rate hikes.

Investors are now watching the University of Michigan Consumer Sentiment Index later on Friday, with economists expecting confidence to remain near historically weak levels as households continue to struggle with high living costs.

Sterling's resilience reflects broader Dollar weakness rather than strong confidence in the UK economy. The UK growth picture remains soft, but fading expectations of further Fed tightening and improving geopolitical sentiment are providing enough support to keep GBP/USD near multi-month highs.

Technical Analysis

GBP/USD is attempting to transition from consolidation to a renewed bullish phase after successfully defending a major support zone near 1.3320–1.3330 on the 4-hour chart. The pair produced a strong rejection from this area, where buyers stepped in aggressively following the recent decline. That rebound has now pushed prices back toward the key 1.3400–1.3410 resistance region, which has acted as a pivotal battleground between buyers and sellers throughout late May and early June.

The recent price action suggests that bullish momentum is gradually rebuilding. After forming a higher low around 1.3330, GBP/USD generated a sharp impulsive rally that reclaimed the 1.3400 handle, indicating that demand remains intact. The pair is currently testing a former resistance zone that has repeatedly capped upside attempts. A successful breakout and sustained close above 1.3420 would confirm a bullish continuation pattern and expose higher targets in the 1.3490–1.3500 area.

The broader structure remains constructive as long as prices continue to hold above the recently established support band near 1.3400. This zone has now shifted from resistance to support and will be critical in determining whether the latest breakout attempt can gather momentum. A sustained hold above this region would strengthen the bullish outlook and encourage additional buying interest.

Looking higher, the next significant resistance is located around 1.3490–1.3500, a level that previously acted as a major turning point. A decisive break above this barrier would likely trigger momentum-driven buying and open the path toward 1.3580–1.3600, where the pair traded earlier in May. Such a move would signal that bulls have regained control of the medium-term trend.

On the downside, failure to maintain traction above 1.3400 could invite renewed selling pressure. Initial support rests at 1.3320–1.3330, which represents the recent swing low and a strong demand zone. A break beneath this area would invalidate the bullish recovery scenario and expose deeper losses toward the 1.3280–1.3300 region. Sustained weakness below that level would suggest that the broader consolidation phase remains dominant.

Although momentum indicators are not displayed on the chart, the sharp rejection from support and subsequent recovery indicate improving bullish sentiment. The strength of the latest advance suggests buyers remain active, though confirmation through a clean break above 1.3420 is still required before anticipating a more aggressive upside extension.

TRADE RECOMMENDATION:

BUY GBP/USD

ENTRY PRICE: 1.3415

STOP LOSS: 1.3330

TAKE PROFIT: 1.3500

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