Both the GBP/JPY currency pair and Gold (XAU/USD) experienced notable moves as market sentiment improved following signs of easing geopolitical tensions between the US and Iran. GBP/JPY snapped a four-day losing streak, trading around 210.82 and up nearly 0.43% on the day, as risk appetite increased and demand for the British Pound strengthened while the Japanese Yen weakened [1]. Gold rallied for the fourth consecutive day, reaching nearly two-week highs past $4,600 and trading at $4,747, with bullish momentum targeting the $5,000 level [2].
US President Donald Trump stated that the US Army could withdraw from Iran within two or three weeks, whether or not a deal is reached, and assured that Tehran will not be able to build a nuclear weapon 'for years.' He also mentioned that the Strait of Hormuz would reopen 'automatically' after the US exit. Trump is expected to address the nation on Thursday at 01:00 GMT to provide an 'important update' on Iran [1][2]. Iranian President Masoud Pezeshkian echoed willingness to end the conflict but requested guarantees to prevent future wars [1].
On the economic data front, the UK S&P Global Manufacturing PMI for March was 51.0, below the forecast of 51.2 and the flash estimate of 51.4, but remained above the 50.0 threshold for the fifth consecutive month. However, manufacturing output contracted for the first time in six months, with Middle East conflict and domestic policy concerns cited as factors [1]. In Japan, the Manufacturing PMI was revised higher to 51.6 in March, up from the preliminary estimate of 51.4 but down from February's 45-month high of 53.0. The Tankan Large Manufacturing Index rose to 17 in Q1, beating expectations, while the outlook index was 14, down from 15 but above the forecast of 13 [1].
Currency heat maps show the British Pound as the strongest against the US Dollar today, while the US Dollar was strongest against the Canadian Dollar. GBP gained 0.67% against USD and 0.49% against JPY, while USD lost 0.67% against GBP and 0.19% against JPY [1][2]. Technical analysis for Gold indicates a near-term bullish bias, with the RSI approaching overbought territory and MACD expanding positively. Gold breached resistance at the 38.2% Fibonacci retracement of the March sell-off, and the immediate trend suggests a target of $5,040, a previous support-turned-resistance [2].
Forward-looking statements include Bank of England Governor Andrew Bailey's caution that markets may be getting ahead of themselves in pricing interest rate hikes, emphasizing the need to address the root cause of the energy price shock. Bailey noted that policymakers may debate a precautionary rate increase, but any decision will depend on how best to return inflation to target [1]. Bank of Japan policymaker Toichiro Asada warned that rising oil prices are creating a 'stagflationary trend,' posing challenges for monetary policy [1].
CONCLUSION
Easing US-Iran tensions have sparked a risk-on rally, lifting GBP/JPY and Gold while weakening the US Dollar. Market participants are closely watching upcoming statements from US President Trump for further clarity. The improved sentiment has driven significant moves across currencies and commodities, with analysts highlighting ongoing risks from energy prices and geopolitical developments.