Sterling held early gains near 1.3500 against the US Dollar in late European trade on Monday, with GBP\/USD firmer as risk appetite improved on expectations the US and Iran may reach an agreement. Equity futures reflected that tone, with S&P 500 futures up almost 1% around 7,550, while the US Dollar Index (DXY) slipped 0.33% to near 99.00. Comments from Washington said an accord was \u201clargely negotiated\u201d, although remarks from Iran suggested talks had progressed on many issues without being close to signature.<\/p>\n
On the charts, GBP\/USD remained around 1.3500 after moving back above the 20-day Exponential Moving Average (EMA) at 1.3474, while the Relative Strength Index (RSI) hovered around 52. Resistance is seen near 1.3612, and a break could set up a move towards 1.3700. If the pair loses the 20-day EMA, it may test 1.3400, with further downside towards the May 18 low of 1.3302 should 1.3400 give way.<\/p>\n
We see the British Pound holding steady near 1.2750 against the US Dollar, supported by a broader risk-on market mood. This positive sentiment stems from expectations that upcoming US-China trade talks in June will be productive. The dollar is weakening as a result, with the US Dollar Index (DXY) slipping to around 104.20.<\/p>\n
This optimism is reflected in equity markets, with S&P 500 futures trading up 0.8% near the 6,150 level. Recent reports from Geneva confirmed the “constructive” nature of preliminary discussions, giving this rally some fundamental support. The market now sees a clearer path to de-escalation, even if a final agreement remains distant.<\/p>\n
However, we must remain cautious as headwinds for the Pound persist. The latest UK Consumer Price Index (CPI) data showed inflation at 2.8%, which complicates the Bank of England’s path forward on interest rates. This could cap any significant rally in the GBP\/USD pair if risk sentiment were to suddenly reverse.<\/p>\n
From a technical standpoint, GBP\/USD is trading just above its 20-day Exponential Moving Average (EMA) at 1.2720, a modest bullish signal. This suggests underlying demand is trying to build a base for a further move higher. The Relative Strength Index (RSI) is hovering around 55, indicating momentum is positive but not yet overbought.<\/p>\n
We are watching for a sustained break above the recent high of 1.2800, which would open the door to test resistance near 1.2910. Conversely, a failure to hold the 20-day EMA could see the pair slide back towards the key support level at 1.2650. A break below that would signal a resumption of the prior downtrend.<\/p>\n
For derivative traders, this environment suggests selling some downside protection may be premature. Historical data from past trade negotiations shows that one-month implied volatility for GBP\/USD often surges ahead of key deadlines, increasing the cost of options. We believe buying long-dated call options or call spreads could be a cost-effective way to position for further upside while limiting risk.<\/p>\n","protected":false},"excerpt":{"rendered":"
Sterling steadies near 1.3500 as risk-on bets, weaker dollar, and bullish technicals support GBP\/USD.<\/p>\n","protected":false},"author":103,"featured_media":17034,"comment_status":"","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[59],"tags":[9,10,58,69,81],"class_list":["post-53938","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-live-updates","tag-dollar","tag-forex","tag-pound","tag-sp500","tag-usd"],"acf":{"acf_article_selection_author":null},"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/53938","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=53938"}],"version-history":[{"count":0,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/53938\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media\/17034"}],"wp:attachment":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media?parent=53938"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/categories?post=53938"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/tags?post=53938"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}