1.3400 regained: British Pound rebounds as Iran war concerns ease ahead of US CPI

Over 0.50% higher: GBP/USD benefits as receding geopolitical concerns bolster sentiment.
82% probability of a December Fed rate increase after robust payrolls data.
3.9% US headline CPI forecast; core inflation projected at 2.8%.

The Pound Sterling is up over 0.50% against the US Dollar on Monday. US President Trump has played down the risk of escalation in the US-Iran war, supporting the advance. Following last Friday's Nonfarm Payrolls report, traders now await the latest US inflation figures. GBP/USD is trading above 1.3400.

TMGM Analysis: Financial Market News, Economic Calendar & Market Insights

GBP/USD rises on geopolitical optimism; US CPI in focus as Dollar retreats

Trump’s remarks continue to support risk appetite despite the ongoing US Navy blockade. According to the IRGC, Hormuz is closed to unauthorised transit. US equities have opened higher, with bulls buying the dip after the sell-off that followed the Democrats' US midterm election victory. The Greenback, meanwhile, is losing ground.

A 0.36% decline has taken the US Dollar Index (DXY) to 101.91, lending support to GBP/USD. The index tracks the Dollar against a basket of six currencies.

A 7-2 vote delivered a Bank of England rate increase last week, although both dissenters preferred a bigger rise. Despite the hawkish nature of the decision, BoE Governor Bailey played down the prospect of second-round inflation effects, citing a lack of clear evidence.

Forthcoming UK Gross Domestic Product (GDP) data could help shape the interest-rate outlook and clarify the impact of elevated energy prices.

A fall in the US Unemployment Rate from 4.2% to 4.1% accompanied last week’s strong employment report. The figures prompted a modestly hawkish reassessment of the Federal Reserve's December meeting.

According to the CME FedWatch Tool, markets now assign an 82% probability to a Fed rate increase, compared with 76% last Friday.

At the time of writing, Chicago Fed President Austan Goolsbee had struck a hawkish tone. He said services inflation was starting to “pick up,” had become a “big problem,” and that the Fed needed to acknowledge its failure on inflation.

Tuesday’s US Consumer Price Index (CPI) release is the next focus. Headline inflation is projected to increase to 3.9% YoY from 3.7%, while core CPI is expected to reach 2.8% YoY from 2.6%.

GBP/USD Price Forecast: Bullish technical bias

Chart Analysis GBP/USD — Daily price chart: GBP/USD

At 1.3402 on the daily chart, GBP/USD retains a constructive bullish bias. The latest triple of simple moving averages at 1.3359 sits below the price and supports the advance. Further structural support comes from the pair holding above two broken descending trend lines: the earlier breakout reference around 1.3228 and the more recent break near 1.3376. The 14-period Relative Strength Index, at around 54, points to sustained buying pressure rather than overbought conditions. An elevated FXS Fed Sentiment Index also indicates that the macro backdrop remains supportive for sterling.

The recent trend-line breakout zone around 1.3376 provides the nearest downside support. Below it, the triple of simple moving averages near 1.3359 forms a clustered technical floor, followed by deeper structural support around 1.3228 at the earlier long-term descending trend-line break. On the upside, the next major resistance lies around 1.3696 at the break of the rising support trend line drawn from 1.3140. A further barrier stands around 1.3865 at the other rising trend-line break. Previous supply in that area could limit further advances unless buying pressure strengthens.

(The technical analysis of this story was written with the help of an AI tool. Learn more.)

Pound Sterling: Today's Performance

Today's percentage moves in the British Pound (GBP) against the major currencies listed are set out below. The British Pound recorded its strongest performance against the Swiss Franc.

	USD	EUR	GBP	JPY	CAD	AUD	NZD	CHF
USD		-0.46%	-0.39%	-0.22%	0.07%	-0.53%	-1.18%	0.25%
EUR	0.46%		0.07%	0.28%	0.53%	-0.07%	-0.71%	0.72%
GBP	0.39%	-0.07%		0.21%	0.46%	-0.15%	-0.79%	0.64%
JPY	0.22%	-0.28%	-0.21%		0.26%	-0.33%	-0.98%	0.45%
CAD	-0.07%	-0.53%	-0.46%	-0.26%		-0.60%	-1.24%	0.18%
AUD	0.53%	0.07%	0.15%	0.33%	0.60%		-0.64%	0.79%
NZD	1.18%	0.71%	0.79%	0.98%	1.24%	0.64%		1.44%
CHF	-0.25%	-0.72%	-0.64%	-0.45%	-0.18%	-0.79%	-1.44%

Percentage movements between major currencies are displayed in the heat map. Select the base currency in the left-hand column and the quote currency in the top row. To read GBP (base)/USD (quote), for example, locate the British Pound on the left and follow its row across to the US Dollar column. The intersecting cell gives the percentage change for that pair.