GBP/USD rose 0.32% on Tuesday to about 1.3230 in choppy trade, after moving between roughly 1.3160 and near 1.3260. The move ended a five-day losing run, with the wider fall still framed by the drop from about 1.3870 in January to around 1.3010 recently. The uptick followed reports that the US-Iran conflict may be nearing an end. The Wall Street Journal said President Donald Trump told aides he was willing to stop hostilities even if the Strait of Hormuz stayed largely shut, while the New York Post reported he expects the war to end soon.

Focus Shifts To Upcoming Us Data

Attention now turns to US data, with little UK data due this week. The Bank of England held Bank Rate at 3.75% in March and next decides on April 30, while the Federal Reserve held 3.50% to 3.75% and the US releases due include ADP Employment Change (40K consensus), February retail sales (0.5% MoM), ISM Manufacturing PMI (52.5), and Friday’s NFP (60K), with Good Friday likely to thin liquidity. On the 5-minute chart, GBP/USD was near 1.3228 with support at 1.3220, 1.3215, and 1.3205, and resistance at 1.3235, 1.3245, and 1.3260. On the daily chart, it was near 1.3229 with support at 1.3185, 1.3130, and 1.3050, and resistance at 1.3330, 1.3380, and 1.3450. We recall how a year ago, in March 2025, GBP/USD saw a temporary bounce to 1.3230 on fleeting hopes of a US-Iran de-escalation. That relief rally occurred within a broader downtrend from the 1.3870 highs seen in early 2025. The market at that time was dominated by geopolitical risk and the beginning of a major central bank holding pattern. Those peace hopes proved optimistic, as continued tensions in the Strait of Hormuz kept energy prices elevated for the remainder of 2025, with Brent crude averaging over $95 a barrel in the third quarter. This persistent energy shock forced central banks to maintain a restrictive stance longer than anticipated. Looking back, the brief dip-buying interest near 1.31 was a false dawn before the next leg lower. Now, in April 2026, the entire interest rate landscape has shifted from the firm holds we saw in 2025. The Bank of England is holding its Bank Rate at 4.25%, but with the latest inflation report showing UK CPI has fallen to 3.1%, the market is pricing in at least two rate cuts by year-end. Similarly, while the Federal Reserve rate is at 4.50%, weakening economic data has futures markets implying a 70% chance of a first cut by September.

Derivatives And Technical Levels In View

The strong US data that was anticipated back in March 2025 has given way to a much softer picture today. The most recent US Non-Farm Payrolls report came in at just 95,000, well below consensus and a sharp contrast to the positive numbers seen through much of last year. This slowdown confirms that the tight monetary policy from both the BoE and the Fed is finally weighing on economic growth. For derivative traders, this environment of high uncertainty about the timing of rate cuts suggests volatility is underpriced. We see value in buying GBP/USD straddles with a three-month expiry to capture a potential sharp move once either the BoE or the Fed signals a definitive policy pivot. Implied volatility for at-the-money options recently fell to 6.8%, a low not seen since late 2024, presenting a cheap entry for long-volatility positions. Given the technical picture, the 1.3000-1.3200 zone, which acted as support in early 2025, has now become a major resistance area. A cautious bullish strategy could involve buying out-of-the-money call options with a 1.3000 strike price, targeting a longer-term move up as the Fed begins its easing cycle. This provides a low-premium way to position for a recovery while defining risk in case UK economic weakness continues to weigh on the pound. Create your live VT Markets account and start trading now.

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