GBP/USD Middle East Tensions Easier and Steady as Post UK CPI.
The FX market has been relatively quiet compared to the big moves seen in equities and commodities. Investors are weighing developments in the Middle East as well as the latest UK inflation data.
In line with expectations, it was unchanged at 3.0%, while it came in at 3.2%, slightly above forecasts of 3.1%.
However, this data relates to February and had limited impact on the market, as it does not yet reflect the sharp rise in energy prices since early March.
Markets are now pricing in around 68 basis points through December – just two full price hikes. However, that is down from nearly four rate hikes earlier this week as falling oil prices eased inflation concerns.
The fall in oil prices is also reducing the production of gilt. It is currently around 4.81%, down from a high of 5.1% on Monday, when markets were pricing in a significantly more aggressive BoE tightening.
It’s steady as investors digest the latest headlines about efforts to secure a ceasefire in the Middle East.
The dollar’s limited movement suggests investors remain cautious about Trump’s diplomatic efforts, especially since Tehran has ruled out direct talks.
There are also signs of some headline fatigue in the currency markets in particular.
Markets are no longer expecting the Fed to hike this year, with fed funds futures signaling a 26 percent chance of a 25-basis-point hike by December — down sharply from 70 percent a week ago.
The focus will remain firmly on developments in Iran, with more tangible signs of easing likely on the US dollar.
GBP/USD Forecast – Technical Analysis
GBP/USD trades within a descending channel dating back to late January. The price recently found support at 1.3225 and rebounded higher, testing the 200 SMA and the upper band of the falling channel at 1.3435. RSI is neutral.
If momentum picks up, buyers will look to break above 1.3435 to create a higher high and reveal the 50 SMA at 1.3510. Here above 1.3575, the February 26 high comes into play.
A failure to move above the 200 SMA could cause the price to return to a test of 1.3350, the January low. From here the focus returns to 1.3225.
DAX rises on hopes of US-Iran ceasefire
Along with its European peers, it fell by about 1 percent on Wednesday amid hopes that tensions in the Middle East may be beginning to ease. However, concerns over the broader economic impact of the conflict may keep gains limited.
The US is reportedly pursuing diplomatic channels to end the war in Iran and has reportedly sent a 15-point settlement proposal, although Tehran has denied direct talks have taken place.
The development helps allay fears of further escalation after President Trump ordered 2,000 troops to the region. Markets remain highly headline-driven.
While the Strait of Hormuz is effectively closed, Iran has said it will allow non-hostile ships to pass through – a sign that tensions are easing slightly.
are back below $100, although the long-term effects of the recent boom may take time to affect the economy.
Travel and leisure stocks, which came under pressure earlier in the month, fared better, with airlines rising more than 2.5 percent. Banks are also benefiting.
That said, considerable skepticism remains about the credibility of US claims, and markets will want to see more concrete evidence that a ceasefire is truly taking shape.
A key focus is on the Strait of Hormuz, which will need to be fully reopened for oil prices to fall meaningfully further.
DAX Forecast – Technical Analysis
A selloff in the DAX found support at 21,860, and pushed the RSI out of oversold territory, pushing higher. A long lower wick on Monday’s candle shows that there was little demand for selling at a lower price. The rebound is testing resistance at 23,000.
A rose above 23,000 opens the door to 23,400, the September low. Buyers should push higher from here, it shows the 200 SMA at 24,150.
On the downside, support is at 22,500 round number ahead of 21,860, 2026 lower.
