|

GBP/USD advances as US Dollar softens on US-Iran talks, risk-on mood

  • The US Dollar falls after reports suggest Washington and Tehran are close to an agreement.
  • Easing geopolitical tensions reduce the risk premium linked to the Middle East and support risk appetite.
  • Markets now focus on the US ADP Employment Change report due later on Wednesday.

GBP/USD advances on Wednesday and trades around 1.3630 at the time of writing, up 0.65% on the day, benefiting from the broad weakness of the US Dollar (USD). The move comes as investors reduce demand for safe-haven assets following several reports pointing to diplomatic progress between the United States (US) and Iran.

According to Axios, US and Iranian representatives are close to reaching a memorandum of understanding aimed at ending the current conflict and opening a new phase of negotiations regarding Iran’s nuclear program. 

These developments are fueling a strong risk-on move across financial markets and reducing fears of major disruptions to global energy supply. Against this backdrop, the US Dollar Index (DXY) loses 0.71% and falls to 97.80, supporting major currencies against the US dollar, including the Pound Sterling (GBP).

On the UK side, elections for the Scottish Parliament and the Welsh Senedd scheduled for Thursday continue to maintain some caution around British assets. According to Commerzbank analysts, a poor performance by the Labour government could increase political risk in the United Kingdom (UK).

Latest UK macroeconomic data nevertheless remain solid. The S&P Global UK Services Purchasing Managers Index (PMI) was revised higher to 52.7 in April, from a preliminary estimate of 52 and after 50.5 in March. The S&P Global UK Composite PMI also rose to 52.6 from 50.3 previously, reinforcing the near-term economic outlook for the United Kingdom.

Investors are now awaiting the release of the ADP Employment Change report later in the day.

US Dollar Price Today

The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the Canadian Dollar.

USDEURGBPJPYCADAUDNZDCHF
USD-0.67%-0.61%-1.17%-0.11%-0.92%-1.44%-0.59%
EUR0.67%0.06%-0.48%0.59%-0.25%-0.80%0.09%
GBP0.61%-0.06%-0.53%0.53%-0.30%-0.85%0.05%
JPY1.17%0.48%0.53%1.06%0.23%-0.31%0.61%
CAD0.11%-0.59%-0.53%-1.06%-0.81%-1.34%-0.46%
AUD0.92%0.25%0.30%-0.23%0.81%-0.52%0.35%
NZD1.44%0.80%0.85%0.31%1.34%0.52%0.89%
CHF0.59%-0.09%-0.05%-0.61%0.46%-0.35%-0.89%

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).

Author

Ghiles Guezout

Ghiles Guezout is a Market Analyst with a strong background in stock market investments, trading, and cryptocurrencies. He combines fundamental and technical analysis skills to identify market opportunities.

More from Ghiles Guezout
Share:

Editor's Picks

AUD/USD holds steady above 0.7100 after weak Australian PMIs

AUD/USD remains range-bound around 0.7100 in the Asian session on Wednesday after Australia's flash PMIs showed manufacturing slipped into contraction and services expanding slowly for a second straight month. Furthermore, a bullish US Dollar acts as a headwind for the pair as traders keenly await the crucial Trump-Xi summit on Thursday. Meanwhile, markets shrugs off US-Iran indirect talks.

USD/JPY stands firm near mid-157.00s, close to two-week high

USD/JPY hovers around mid-157.00s in the Asian session on Wednesday, near two-week highs touched last Friday as the BoJ's dovish rate hike continues to undermine the Japanese Yen. Meanwhile, the US Dollar remains firm amid the Fed's hawkish stance, adding support to the pair, though JPY intervention fears cap further gains. Markets pay little heed to the completion of the round of US-Iran indirect talks ahead of Trump-Xi meeting.

Gold struggles near $4,350 as USD strength offsets softer bond yields

Gold struggles to build on the overnight bounce from sub-$4,300 levels and remains defensive in Wednesday's Asian session. The US Dollar sits near its July 30 high amid the Fed's hawkish stance and geopolitical risks, capping the bullion. Meanwhile, the recent decline in Oil prices eases inflation fears, keeping US bond yields depressed and limiting the downside in non-yielding yellow metal.

Ethereum holds above $2,700 as investors continue bullish positioning
Ethereum (ETH) held above $2,700 on Tuesday after starting the week on a positive note. The top crypto stretched its 7-day gains to 14% after energy prices and the US 10-year Treasury yields dipped on Monday.
AI capex enters the Fed's inflation case with October hike pricing past even money

AI capex enters the Fed's inflation case with October hike pricing past even money; UK headroom halved and French CDS at post-2020 wides before either budget lands; Pezeshkian in New York with a Gulf slot scheduled and no Iranian bilateral. Monday priced the same AI buildout at two completely different costs of capital.

BoJ Recap: Not as hawkish as expected

The Bank of Japan (BoJ) raised its short-term interest-rate target to 1.25% from 1.00% in a 7-2 vote, marking another step in the normalisation of monetary policy and widely matching what everyone has been expecting for weeks.