• GBP/USD rebounded on Thursday as the dollar weakened following reports of a ceasefire extension agreement between the U.S. and Iran and plans for further talks.
• The United States and Iran signed a 60-day memorandum of understanding to maintain the ceasefire and start nuclear negotiations, Axios reported on Thursday.
• On the data front, U.S. inflation increased at its fastest pace in three years in April, driven by higher energy prices amid the war with Iran, signalling that the Federal Reserve could hold interest rates unchanged for longer.
•The personal consumption expenditures (PCE) price index rose 0.4% month-on-month in April after shooting up 0.7% in March.
• Ongoing geopolitical risks in the Middle East are likely to cap upside in sterling, as stubborn UK inflation keeps the BoE on a tight policy path through H2 2026, potentially slowing economic growth..
• Concerns over UK political instability are expected to limit gains in GBP/USD above the 1.35 area, unless markets see a definitive Iran peace deal.
• Immediate resistance is located at 1.3448(SMA 20), any close above will push the pair towards 1.3522(50%fib)
• Strong support is seen at 1.3371(38.2%fib) and break below could take the pair towards 1.3324(Lower BB)
Recommendation: Good to sell around 1.3450, with stop loss of 1.3550 and target price of 1.3390


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