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Pound Nears 1.3500 as US-Iran Deal Hopes Shift Dollar Flows
GBP/USD tests 1.3500 as US-Iran deal hopes weaken the dollar and lower oil prices. A breakout opens 1.3600-1.3700; failure risks a pullback to 1.3350. Track talks for the next trigger.
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The British Pound is pressing toward 1.3500 against the U.S. Dollar. The driver is a shift in geopolitical sentiment: renewed hopes for a US-Iran deal that could reduce oil risk premia and support risk appetite across markets. This movement is not simply a risk-on lift; it alters the dollar's safe-haven premium and directly benefits the UK's terms of trade.
The 1.3500 level is a multi-month resistance zone. A sustained break above it would mark the pound's highest level since early 2024. The catalyst is about more than oil prices. When US-Iran tensions ease, the dollar typically loses its geopolitical bid. That allows currencies like the pound to rally. The mechanism runs through both lower crude prices and a weaker greenback.
Why the Pound Is Benefiting from US-Iran Deal Hopes
A US-Iran deal would likely ease sanctions on Iranian oil, boosting global supply and lowering crude prices. Lower oil prices are a net positive for the UK, a major oil importer. That reduces headline inflation pressure and gives the Bank of England more flexibility on rate policy. At the same time, any dollar weakness amplifies the GBP move. The DXY has slipped in recent sessions as risk-on flows rotate out of the greenback.
This is not a one-off move. The market is pricing a lower geopolitical risk premium that kept the dollar bid for much of 2024. If talks progress, the pound could extend gains against the dollar faster than against other G10 currencies because the oil channel directly benefits the UK economy. The forex correlation matrix now shows GBP/USD moving inversely to crude oil, reinforcing the oil-channel thesis.
The 1.3500 Level and the Technical Setup
The 1.3500 area is the next major technical test. A clean break above it would open a path toward the 1.3600–1.3700 zone. Traders need to see follow-through buying beyond the initial risk-on impulse. The next catalyst is actual detail from the negotiations. Any setback – a stalled round of talks or renewed sanctions rhetoric – could quickly unwind the move.