The British Pound is trading at approximately 1.3500 during Thursday’s session, remaining largely stable for the day after bouncing back from earlier intraday losses that saw the pair dip to 1.3450 — a new weekly low influenced by heightened demand for the safe-haven US Dollar amid the escalating situation in Iran. During mid-European hours, some session prints reached 1.3510, while overnight activity observed Cable trading within a narrow 65-pip range, fluctuating between approximately 1.3490 and 1.3540 throughout Wednesday before the pullback intensified. The two-month high of 1.3599 recorded on April 17 serves as the immediate resistance that buyers must overcome to maintain the upward momentum, whereas the peak of 1.3869 from January 27 — the highest point since September 2021 — acts as the key target that determines the sustainability of the overall uptrend. On the downside, the five-month low at 1.3159 recorded on March 31 and the 1.3010 pivot from November 2025 (the lowest since April 2025) represent the deeper floors that would only be relevant if the current consolidation resolves sharply lower. The Dollar Index remains steady in the range of 98.57 to 98.80, marking a 10-day peak that indicates a strong safe-haven demand for the Greenback amid ongoing tensions in Hormuz. This situation represents the most significant obstacle to any potential recovery for the Sterling. In straightforward terms, Cable finds itself caught between a surprising UK data release that suggests higher prices and a global risk-off sentiment that maintains demand for the Dollar. The outcome of this conflict will determine the next 200-pip movement.
The primary fundamental driver bolstering the Pound during Thursday’s session was the S&P Global flash PMI release, which provided a notable upside surprise across all key components. The flash Composite PMI recorded a value of 52.0 for April, significantly exceeding the consensus estimate of 49.8 and rising from the previous reading of 50.3 — indicating a shift from the boundary of expansion and contraction into a definitive growth phase. The Manufacturing PMI increased to 53.6, and the Services PMI hit 52.0, indicating that the growth is widespread rather than concentrated in one sector. The significance of these figures is heightened due to the market’s bearish positioning prior to the release. The consensus before the announcement anticipated a decline in Manufacturing to 49.9, with Composite expected to fall to 49.8, while GfK Consumer Confidence was projected to worsen to -25 from -21. The actual outcome necessitated a swift adjustment as traders eliminated the near-term expectation for aggressive easing by the Bank of England and realigned their rate-path assumptions to reflect a more measured approach from the central bank. Friday’s UK Retail Sales are projected to show a 0.2% month-on-month increase, indicating a cautious rebound from the -0.4% figure recorded in February. A significant improvement in this data would reinforce the ongoing trend of strong UK economic indicators and provide further support for the bullish outlook on Sterling.
The context surrounding the PMI surprise is characterized by a UK inflation scenario that persists at a level that maintains the Bank of England’s careful stance regarding rate cuts. The Consumer Price Index increased by 0.7% month-on-month in March, marginally surpassing the consensus estimate of 0.6%. The annual rate also saw a slight rise, reaching 3.3% year-on-year. Core CPI eased slightly to 3.1% year-on-year, compared to the anticipated 3.2%, which moderated the hawkish sentiment but did not eliminate it. The interplay between ongoing inflation in the services sector and a manufacturing sector that is now expanding presents a true challenge for the BoE — inflation levels remain too high to warrant immediate easing, yet growth has not declined sufficiently to necessitate intervention. The current configuration provides structural support for Sterling, as the spread between UK and US policy rate expectations is compressing at a slower pace than what the markets had anticipated. The CME FedWatch tool indicates a 99.5% probability that the Federal Reserve will keep rates within the 3.50% to 3.75% range at the April 29 meeting, alongside a 76.8% probability of maintaining this stance at the December meeting. This scenario suggests that the Fed is effectively pausing, while the BoE adopts a similar wait-and-see approach. The divergence in central bank policies that had previously been unfavorable for the Pound is now diminishing, which bodes well for GBP/USD in the medium term.
The predominant factor impacting Cable at present is the geopolitical situation surrounding the Strait of Hormuz, which has disrupted wider foreign exchange markets and compelled all non-Dollar currencies to adopt a defensive stance. Reports indicate that Iranian parliament speaker Mohammad Bagher Ghalibaf has stepped down from the negotiating team, as per Israeli media, leading to an immediate shift towards risk-off sentiment. With the lead Iranian negotiator no longer involved, the US may seek to finalize a deal; however, there appears to be a lack of individuals on the opposing side who possess the necessary authority to engage in negotiations. The recent development caused EUR/USD to decline towards the 1.1670 level, while Cable was pressured down to 1.3450, until buyers returned following the UK data release. President Trump’s announcement of an indefinite ceasefire — contingent upon a new proposal from Iran — alongside the US Navy’s directive to “shoot any boat placing mines in Hormuz” has maintained a heightened risk premium in the Dollar, despite the ongoing challenges in diplomatic negotiations. The Strait accounts for approximately 20% of worldwide seaborne crude. As long as it stays largely closed, oil prices—WTI at $96.03 and Brent at $105.10—will maintain elevated inflation expectations, thereby reinforcing the Dollar through the prolonged higher rate narrative. This presents a structural challenge for Sterling that cannot be mitigated solely by UK-specific data.
The daily chart for GBP/USD presents a positive outlook despite the underlying volatility. Cable has fallen below an ascending channel pattern that had defined the recovery from the March low, establishing a near-term bearish outlook that warrants attention. Nevertheless, the pair stays slightly above the 9-period EMA around 1.3493 and well above the 50-period EMA at 1.3427. This configuration of short- and medium-term moving averages positioned below the current level suggests ongoing underlying demand. The 14-day RSI reading near 56 indicates a positive momentum that is not yet overextended, suggesting potential for additional gains while the pair continues to find support on pullbacks. Reclaiming the ascending channel would aim for the April 17 high at 1.3599, with a further advance toward the upper boundary of the channel near 1.3810 becoming plausible if that initial hurdle is surpassed. A breakout above the channel ceiling would strengthen the bullish sentiment and pave the way toward 1.3869 — the structural high from January 27, which represents the peak level since September 2021. A sustained break below the 9-day EMA at 1.3493 could lead to a test of the 50-day EMA at 1.3427, followed by the March 31 low at 1.3159 and the 1.3010 pivot from November 2025. The current trajectory shows a sideways-to-up movement, yet a definitive daily close beneath 1.3427 would significantly alter the structural outlook to a bearish stance.