The Pound Sterling continues to strengthen against the US Dollar, with GBP/USD marking its third straight day of gains and trading near the 1.3400 level during Wednesday’s Asian session. The pair is benefiting from a weaker US Dollar, as safe-haven demand declines following the announcement of a two-week ceasefire between the United States and Iran.
Despite the positive momentum, the upside for GBP/USD may remain limited. The easing of geopolitical tensions has led to softer oil prices, which could reduce inflationary pressures in the UK. This, in turn, may allow the Bank of England to revisit its rate-cut stance. Before the conflict, markets were already expecting two to three interest rate cuts in 2026, expectations that were temporarily pushed aside due to the surge in energy-driven inflation.
US President Donald Trump confirmed the ceasefire agreement in a post on Truth Social, stating that the deal is conditional on Iran reopening the crucial Strait of Hormuz. A White House official also noted that Israel has agreed to the temporary truce.
Meanwhile, an Iranian official revealed that further negotiations with the US will take place in Islamabad, Pakistan, starting Friday. The discussions aim to finalize the agreement within 15 days, with the possibility of extension if required.
However, tensions in the region have not fully subsided. Missile alerts continue across parts of the Middle East, with Israel reporting incoming missiles from Iran. Qatar’s Defense Ministry also confirmed that its forces successfully intercepted a missile targeting the country.
