Pound Rallies Above $1.3350 as Iran Diplomacy Hopes Boost Sterling

The British pound rallied against a weakening US dollar after fresh hopes for diplomacy with Iran were reported over the weekend. The GBP/USD pair broke above the 1.3350 resistance level, which had previously capped gains in recent weeks.

The move was driven by reduced demand for safe-haven dollars as traders interpreted the diplomatic efforts as a potential step toward reducing geopolitical risk in the Middle East. This shift in sentiment allowed the pound to reclaim ground lost in previous sessions.

However, analysts noted that the rally remains fragile and vulnerable to sudden reversals if tensions escalate again. The Bank of England's next policy decision is still months away, leaving the pound sensitive to global risk flows.