Pound Slumps Against USD Amid Iran Deal Hopes

The pound is struggling to gain traction against the US dollar as sterling lags behind other currencies despite a broadly weaker dollar. The GBP/USD exchange rate held steady at 1.3426 on Tuesday, with investors growing hopeful that the US and Iran may reach an agreement to restore shipping through the Strait of Hormuz.

This development would reduce inflation risks and the likelihood of further rate hikes, improving market sentiment and weighing less heavily on sterling. The outcome of last week's Bank of England meeting reinforced this view, as markets scaled back expectations of a rate hike in 2026.

Technical analysis suggests that GBP/USD is forming a move lower towards 1.3380, with an upside breakout opening the way for a move towards 1.3500 and a downside breakout suggesting a move towards 1.3300 with scope to extend to 1.3190.