GBP/USD Rebounds Above 1.3450 as US Dollar Softens Amid Geopolitical Uncertainty

GBP/USD Bounces Back as US Dollar Softens on Middle East Tensions

Key Highlights:

• GBP/USD rebounds above 1.3450 after bouncing off key support at 1.3400.
• US Dollar flows ease during a quiet US holiday session.
• Geopolitical risks linger, especially regarding potential US military action on Iran.
• Iranian and US diplomats engage in talks, reducing emotional volatility.
• Low-volume trading gave Cable room to gain, escaping recent bearish pressure.

Cable Gains Ground in Thin Market Conditions

After slipping to 1.3400, the British Pound (GBP) staged a technical recovery against the US Dollar (USD), breaking back above 1.3450 as geopolitical developments paused aggressive USD buying. The US market holiday on Wednesday limited liquidity, giving GBP/USD bulls an opportunity to step in.

Geopolitical Headlines Shape Sentiment

Markets remain wary as tensions between Israel and Iran escalate. According to CBS and The Times of Israel, the Trump administration may be preparing a pre-emptive strike on an Iranian nuclear facility, the first since 2003’s Iraq invasion.

A possible decision from Washington is expected within 24–48 hours, which could cause major ripples in the forex market.

Diplomatic Efforts Offer Some Relief

In contrast to military rumors, diplomatic backchannels are active. Reports cite US Special Envoy Steve Witkoff in contact with Iran’s Foreign Minister Abbas Araghchi. The latter expressed willingness to resume nuclear talks — on the condition that Israeli long-range attacks are halted.

Araghchi is set to meet with European leaders in Geneva this Friday, potentially softening geopolitical fears.

GBP/USD Technical Outlook

The pair:

• Bounced from support near 1.3400
• Regained bullish footing above 1.3450
• Could target resistance around 1.3500 if risk sentiment improves

Support remains at 1.3400, while a break above 1.3500 could signal further upside.

Related Content on Tredu.com:

• US Dollar Faces Pressure as Geopolitical Risks Mount
• How Geopolitical Events Impact Forex Markets
• GBP/USD Technical Levels to Watch This Week