Sterling fell in the North American session after US President Donald Trump said the conflict with Iran could last two to three weeks. GBP/USD was 1.32144, down 0.40%, after dropping to a two-day low of 1.3181 and then moving back above 1.3200.
Trump said the mission in Iran would finish very fast and warned of US strikes on energy plants and oil facilities if no deal is reached. The US Dollar rose, global equities fell, and crude prices increased.
Iran Strait Of Hormuz Update
A report said Iran is drafting a protocol with Oman for Strait of Hormuz traffic, via IRNA. After this, GBP/USD recovered part of its earlier fall.
US data was mixed: Challenger job cuts were 60,620 in March, more than 24% higher than 2025 figures. Initial Jobless Claims for the week ending March 28 were 202,000, below estimates of 212,000 and down from 215,000.
Dallas Fed President Lorie Logan said policy is well-positioned and rates may be adjusted as appropriate. She said the Middle East conflict adds uncertainty.
UK and US markets are shut on Friday for Good Friday, but US data continues. March Nonfarm Payrolls are expected at 60,000 after -92,000 in February, with unemployment seen at 4.4%.
Technical Levels And Market Outlook
On charts, GBP/USD was near 1.3240, with resistance at 1.3350 and 1.3480, then 1.3550. Support is near 1.3220, then 1.3035 and 1.2900.
Looking back to the spring of 2025, we remember the sharp retreat in the British Pound when US-Iran tensions escalated. The spike in the US Dollar was driven by a flight to safety, but that geopolitical premium has since faded. Now, in April 2026, the primary driver for GBP/USD is the clear divergence in central bank policy.
The US economy continues to show resilience, with the latest March Nonfarm Payrolls adding a solid 190,000 jobs and year-over-year inflation proving sticky at 2.8%. This persistent data has validated the Federal Reserve’s decision to hold interest rates firm, supporting a stronger dollar. In contrast, UK inflation has fallen more convincingly, now standing at just 2.1%, putting the Bank of England in a much better position to consider rate cuts.
This policy gap suggests that bearish positions on GBP/USD remain attractive. We believe traders should consider buying put options to hedge against or speculate on further downside in the pair. The cost of these options remains reasonable, as implied volatility has settled since the geopolitical flare-ups of 2025.
The memory of last year’s sudden conflict, however, serves as a crucial reminder of how quickly markets can shift. While the focus is on economics now, any unforeseen event could spark a rapid change. Therefore, strategies that benefit from a spike in volatility, such as long straddles, could be prudent for those anticipating instability.
From a technical standpoint, the levels we watched in 2025 are now distant memories. The key support at 1.3035 eventually gave way later that year, confirming the deeper downswing that brought us to the current trading range around 1.2500. Those former support levels from last year, like 1.3220, now represent significant long-term resistance.
