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 weakness in the US Dollar as demand for safe-haven assets eased amid reports of diplomatic progress between the US and Iran.<\/p>\n
Axios reported that US and Iranian representatives are close to a memorandum of understanding. The reported aim is to end the current conflict and open a new phase of talks on Iran\u2019s nuclear programme.<\/p>\n
The Pound also climbed from weekly lows near 1.3500 on Tuesday to reach session highs of 1.3595 on Wednesday. Reduced safe-haven demand for the US Dollar supported the pair.<\/p>\n
Earlier on Wednesday, US President Donald Trump announced a pause in the Project Freedom plan to escort vessels out of the Strait of Hormuz. He said there was \u201cgreat progress\u201d in peace negotiations with Tehran.<\/p>\n
We saw from the perspective of 2025 how quickly the US Dollar can weaken on signs of geopolitical de-escalation. The diplomatic progress between the US and Iran at that time removed safe-haven demand, pushing GBP\/USD from near 1.3500 to above 1.3600. This serves as a key reminder of how sensitive currency markets are to shifts in global risk appetite.<\/p>\n
Today, we are seeing a different dynamic as renewed trade friction between the US and China is increasing demand for the dollar as a safe haven. This is capping any significant gains in the Pound, even with strong domestic data. The pair has struggled to hold gains above 1.4000 despite a hawkish Bank of England.<\/p>\n
This dollar strength is being tested by domestic factors, as last week’s Non-Farm Payrolls report showed a gain of only 155,000 jobs, missing expectations and hinting at a cooling US economy. In contrast, the UK’s latest CPI reading came in at 3.1%, keeping pressure on the Bank of England to maintain its tight policy. This creates a conflicting narrative between geopolitical flows and central bank divergence.<\/p>\n
For derivative traders, this environment suggests that buying volatility could be a prudent strategy. The Cboe Sterling Volatility Index (BPVIX) has already ticked up to 9.8 from a low of 8.5 last month, and there could be further room to rise if tensions escalate or economic data surprises. Using options, such as straddles, allows for positioning for a significant move in GBP\/USD without betting on which of these powerful forces will win out.<\/p>\n
Create your live VT Markets account<\/a>\u00a0and\u00a0start trading<\/a>\u00a0now. <\/b><\/p>\n","protected":false},"excerpt":{"rendered":" GBP\/USD climbed to 1.3630 as dollar weakened with easing safe-haven demand amid US-Iran diplomatic progress.<\/p>\n","protected":false},"author":103,"featured_media":17032,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[59],"tags":[],"class_list":["post-49634","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-live-updates"],"acf":{"acf_article_selection_author":null},"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/49634","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/users\/103"}],"replies":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/comments?post=49634"}],"version-history":[{"count":0,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/49634\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media\/17032"}],"wp:attachment":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media?parent=49634"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/categories?post=49634"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/tags?post=49634"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}