GBP/USD faced fresh selling in the Asian session on Thursday and fell from the weekly high near 1.3345. It dropped to the mid-1.3200s after US President Donald Trump’s comments lifted the US dollar.
Trump repeated a 2–3 week deadline and threatened strikes on Iran’s energy infrastructure if no deal is reached. Tehran rejected his claim that talks are going well, while reports said the UAE is pushing for military action to reopen the Strait of Hormuz.
Gbp Usd Technical Picture
On Wednesday, GBP/USD rose about 0.6% and moved back above 1.3300 after spending much of late March below that level. It remains below the January high near 1.3850 and is under the 50-day and 200-day exponential moving averages near 1.3400 and 1.3350.
The rebound followed a March low near 1.3150, though the Stochastic RSI moved back towards overbought territory. Bank of England Governor Andrew Bailey said markets had priced rate hikes too quickly and noted earlier signals pointed to one or two rate cuts in 2026, before the Iran crisis.
The US dollar is gaining significant strength due to rising geopolitical tensions in the Middle East, pushing GBP/USD down from the 1.3345 area into the mid-1.3200s. This move follows President Trump’s firm deadline with Iran, creating a classic flight-to-safety trade that benefits the dollar. We see this trend continuing as long as the threat of conflict in the Strait of Hormuz remains.
Market volatility has surged, with the Cboe Sterling Volatility Index jumping over 15% in the last week. Options data confirms this bearish sentiment, as one-month risk reversals for GBP/USD have fallen to -0.7, indicating a strong bias for put options that protect against a drop in the pound. This shows that traders are actively paying a premium to position for further downside.
BoE Policy Drag On Sterling
On the sterling side, the Bank of England is adding to the weakness. Governor Bailey’s recent dovish comments have been reinforced by the latest UK CPI data from last week, which at 2.1% came in slightly below expectations. This gives the central bank little reason to consider hiking rates, creating a stark policy divergence with the United States.
We have seen this pattern before, particularly during periods of Middle East tension in late 2019, when safe-haven flows consistently supported the dollar against other currencies. The current situation appears to be following a similar script. The combination of a strong dollar and a fundamentally weak pound makes the path of least resistance for GBP/USD appear lower.
Given this outlook, derivative traders should consider buying GBP/USD put options to profit from a potential decline while limiting risk. Strike prices below the recent March low of 1.3150, such as 1.3100 or even 1.3000, are becoming increasingly attractive. The elevated volatility means options are more expensive, but they offer defined risk in an uncertain environment.
All eyes will be on the upcoming US Non-Farm Payrolls report, scheduled for release this Good Friday. Last month’s report showed a robust addition of 295,000 jobs, and another strong print would likely amplify dollar strength. This could be the catalyst that pushes GBP/USD through key support levels in the weeks ahead.
