• The announcement of the reopening of the Strait of Hormuz improves sentiment and weakens the Dollar.
• Fed cut expectations returned, with traders pricing in easing back into 2026.
• BoE tightening bets continued to support Sterling’s broader advance.

GBP/USD advances during the North American session on Friday as breaking news revealed Iran’s reopening of the Strait of Hormuz following the agreement of a ceasefire in Lebanon, which pushed the British Pound (GBP) to a daily high near 1.3600. At the time of writing, the pair trades at 1.3567, up 0.36%.

Sterling gains as truce hopes revive BoE-Fed policy divergence

Iranian Foreign Minister Abbas Araghchi announced that the Strait was open for commercial vessels for the remainder of the US-Iran ceasefire. Nevertheless, the passage of military ships or ships from countries hostile to Tehran would not be allowed.

US President Donald Trump said the US military blockade remains in place until there’s a deal between Washington and Tehran, which he said should happen quickly. He added that talks will begin as soon as this weekend and that he will go to Pakistan once the deal is closed.

The financial markets cheered the news, while the Greenback fell to a seven-week low as traders began to price in Federal Reserve (Fed) rate cuts in 2026. Data from LSEG Workspace show that investors are expecting nearly 16 basis points of easing towards the end of the year.

San Francisco Fed Mary Daly said that monetary policy is “slightly restrictive,” above the neutral rate of 3%. She supported one or two cuts in 2026 before the Oil price shock. She could leave rates steady, but if inflation rises, a hike would be needed. A quick end to the conflict can put rate cuts back on the table.

Sterling is extending its gains due to money markets pricing in further tightening by the Bank of England (BoE). Markets expect 24 basis points of tightening by the UK central bank, which, according to its Chief Economist, Huw Pill, inflation is the top priority over other trade-offs.

Aside from this, domestic politics are grabbing the headlines as the Prime Minister Keir Starmer faces pressure to resign after his former ambassador to the US, Peter Mandelson, failed background checks and was tied to Jeffrey Epstein.

GBP/USD Price Forecast: Technical outlook

In the daily chart, GBP/USD trades at 1.3549, holding a constructive bullish tone as spot remains above the cluster of the 50-day, 100-day and 200-day simple moving averages (SMAs) around 1.3530. This tight moving-average floor reinforces the broader uptrend defined by the rising support line from 1.3035, while the FXS Fed Sentiment Index grinding higher suggests underlying demand for the pair remains intact despite recent pullbacks.

On the downside, immediate support is located just below the market at the grouped 50-day, 100-day and 200-day SMAs near 1.3530, with the longer-term rising trend line from 1.3035 offering a deeper structural base if a sharper correction unfolds. On the topside, the primary hurdle is the descending resistance line stemming from 1.3869, and a sustained break above this cap would be needed to open the door to a more extended advance.

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