Pound Strengthens#
The British pound climbed above $1.34 on Monday, recovering from earlier lows around $1.32. This increase followed U.S. President Donald Trump's announcement of a temporary delay in military strikes against Iranian energy infrastructure. Trump described discussions with Tehran as "productive," which contributed to the pound's rise.
Market Reactions#
Following Trump's announcement, UK equities and global stock markets saw a positive turn. In contrast, Brent crude oil prices dropped significantly, falling 9.8% to $101.26 per barrel. Similarly, U.S. West Texas Intermediate crude futures decreased by 8.9% to $89.46 per barrel. Additionally, spot gold prices declined by 1.05% to $4,444.17 an ounce, while gold futures fell 2.5% to $4,492.86 per ounce.
Trump's Statements#
In a post on Truth Social, Trump indicated that he has instructed the military to postpone strikes for five days, contingent on the success of ongoing discussions with Iran. He also mentioned in an interview with Fox Business that Iran is eager to reach a deal, which could materialize within five days or sooner.
Iran's Response#
However, Iran's Fars News Agency reported that there are no communications with the U.S., and a senior Iranian security official dismissed Trump's comments as "psychological warfare."
Future Outlook for the Pound#
Last week, UBS released a note suggesting that the British pound may face continued pressure against the U.S. dollar in the near term. They adjusted their June forecast for GBP/USD to 1.34, with projections of 1.37 for September and 1.40 for December and March 2027. UBS noted that there is resistance around 1.35, with stronger resistance at recent highs of 1.37-1.38.