GBP\/USD rose on Wednesday and traded near 1.3630 at the time of writing, up 0.65% on the day. The move followed broad US Dollar weakness as demand for safe-haven assets eased after reports of diplomatic progress between the US and Iran.<\/p>\n
Axios reported that US and Iranian representatives were close to a memorandum of understanding to end the current conflict. The report also referred to a new phase of talks on Iran\u2019s nuclear programme.<\/p>\n
Risk appetite increased across markets, easing concerns about disruption to global energy supply. The US Dollar Index (DXY) fell 0.71% to 97.80, supporting major currencies including the Pound.<\/p>\n
In the UK, Scottish Parliament and Welsh Senedd elections are due on Thursday, adding caution around British assets. Commerzbank said a poor result for the Labour government could raise political risk.<\/p>\n
UK data remained firm, with the S&P Global UK Services PMI revised to 52.7 in April from 52 and up from 50.5 in March. The S&P Global UK Composite PMI rose to 52.6 from 50.3.<\/p>\n
Markets later await the ADP Employment Change report.<\/p>\n
Looking back, we recall a similar period in early May 2025 when a risk-on mood dominated markets. Progress in US-Iran diplomacy weakened the US dollar, pushing the US Dollar Index (DXY) down to 97.80 and lifting GBP\/USD to around 1.3630. At that time, solid UK economic data provided an additional tailwind for the pound.<\/p>\n
The environment today is markedly different, as the US dollar has shown persistent strength over the last year. The DXY is currently trading much higher, around 105.2, reflecting a more cautious global sentiment and keeping GBP\/USD contained near 1.2550. This contrasts sharply with the brief period of dollar weakness we saw in 2025.<\/p>\n
However, recent UK economic data is even more robust than what we observed last year. The S&P Global UK Services PMI for April 2026 was just reported at a strong 55.0, comfortably beating last year’s 52.7 reading. This indicates that the UK’s service-led economy is accelerating, which is a significant positive for the pound.<\/p>\n
This economic strength is putting pressure on the Bank of England to maintain a hawkish stance, while recent softer US jobs data may give the Federal Reserve reason to pause. This potential divergence in monetary policy is creating a bullish case for the pound against the dollar. We believe this makes buying call options on GBP\/USD an attractive strategy to capture potential upside.<\/p>\n
Given the underlying dollar strength, an outright long position is risky, but a call option limits potential losses. We are considering June 2026 GBP\/USD call options with a strike price around 1.2700. This position allows us to benefit if the strong UK data and a hawkish Bank of England push the pair higher in the coming weeks.<\/p>\n
Create your live VT Markets account<\/a>\u00a0and\u00a0start trading<\/a>\u00a0now. <\/b><\/p>\n","protected":false},"excerpt":{"rendered":" GBP\/USD climbs near 1.3630 as dollar weakens on US-Iran diplomacy; UK elections and firm PMIs watched.<\/p>\n","protected":false},"author":103,"featured_media":17035,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[59],"tags":[],"class_list":["post-49632","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-live-updates"],"acf":{"acf_article_selection_author":null},"aioseo_notices":[],"aioseo_head":"\n\t\t\n\t\n\t\n\t\n\t\n\n\t\t