The British Pound (GBP) rebounded on Thursday, gaining 0.08% against the US Dollar following reports from Axios that US and Iranian negotiators have reached a 60-day memorandum of understanding to extend the ceasefire and initiate negotiations on Iran's nuclear program. This agreement is pending final approval from US President Donald Trump, with both sides awaiting confirmation from their senior leadership, according to two US officials and a regional source involved in the mediation process [1].
Following the news, the US Dollar Index (DXY), which tracks the USD against six major currencies, declined by 0.17% to 99.05, reflecting pressure on the Greenback as ceasefire hopes emerged [1]. The GBP/USD currency pair traded at 1.3437 after recovering from daily lows of 1.3367 [1].
Economic data released earlier showed that US inflation, as measured by the Core Personal Consumption Expenditures (PCE) Price Index, remained above 3% in April, rising from 3.2% to 3.3% year-over-year, driven by high energy prices attributed to the US-Iran war [1]. Additionally, the US Bureau of Economic Analysis revised first-quarter GDP growth downward from 2% to 1.6% year-over-year, and the US Department of Labor reported that weekly jobless claims rose to 215,000, surpassing forecasts of 211,000 for the week ending May 23 [1].
Federal Reserve officials provided mixed signals: St. Louis Fed President Alberto Musalem indicated that a rate hike might be necessary if inflation does not ease, while New York Fed President John Williams stated that monetary policy is currently appropriate given the outlook [1]. In the UK, political uncertainty is increasing as rivals to Prime Minister Keir Starmer prepare to challenge his leadership within the Labour Party [1].
Looking ahead, the UK economic calendar features a speech by Bank of England Governor Andrew Bailey, while US market participants will monitor comments from Fed officials Schmid, Bowman, Paulson, and Daly [1]. Technical analysis shows GBP/USD trading just below a cluster of simple moving averages near 1.3445, with momentum indicators suggesting consolidation between support and resistance levels [1].
CONCLUSION
The British Pound's modest recovery was driven by optimism over a potential US-Iran ceasefire deal, which pressured the US Dollar. However, persistent US inflation, weaker GDP growth, and rising jobless claims add uncertainty to the outlook. Market participants will closely watch upcoming central bank communications and political developments for further direction.