The British pound recovers against the dollar after a US-Iran peace deal weakens the greenback ahead of the Bank of England decision.
The GBP/USD pair climbed back above 1.3300 in Asian trading Thursday, recovering from a two-month low near 1.3260. The move follows a modest pullback in the US dollar after US and Iranian leaders signed a memorandum to end hostilities and reopen the Strait of Hormuz.
The Federal Reserve’s hawkish policy shift on Wednesday had lifted the dollar to its highest level since late March, with the central bank signaling at least one more rate hike this year. The median fed funds rate projection for 2026 rose to 3.8% from 3.4% in March, reducing expectations for near-term cuts.
Market focus now shifts to the Bank of England, where bets for aggressive tightening have receded, capping further upside for the pound.