• GBP/USD kicks off the new week on a positive note and climbs to over a one-week top on Monday.
• Hopes for a potential US-Iran peace deal undermine the safe-haven USD and support spot prices.
• The broader fundamental backdrop warrants some caution before positioning for any further gains.

The GBP/USD pair is seen building on its modest bullish opening gap on Monday and recovering further from its lowest level since April 8, around the 1.3300 round figure touched last week. The intraday move up is sponsored by a broadly weaker US Dollar (USD) and lifts spot prices back closer to the 1.3500 psychological mark, or a one-and-a-half-week high during the Asian session.

Developments over the weekend spurred hopes for a potential US-Iran peace deal and undermined the USD's reserve currency status. Furthermore, an intraday slump in Crude Oil prices to over a two-week low eases inflationary concerns and trigger a steep decline in US Treasury bond yields, exerting additional downward pressure on the buck and providing a goodish lift to the GBP/USD pair.

That said, the US and Iran remained at odds over key issues, including blockades on the Strait of Hormuz and Tehran's nuclear program. Moreover, US President Donald Trump said on Sunday that he had told his representatives not to rush into any deal with Iran. This should keep the market enthusiasm in check, which, along with hawkish US Federal Reserve (Fed) bets, should limit USD losses.

In fact, traders are now fully pricing in a 25-basis-point (bps) interest rate hike from the US central bank in ​January 2027 on the back of sticky US inflation data and the recent hawkish remarks from influential FOMC members. In contrast, investors have pushed back their expectation for the likely timing of the next interest rate hike by the Bank of England (BoE), warranting caution for the GBP/USD bulls.