• Sterling rose as ceasefire speculation initially lifted broader market sentiment.
• Rising oil prices and fading deal hopes kept traders cautious.
• Weak UK services data reinforced stagflation concerns despite Dollar softness.

The Pound Sterling rose by over 0.20% on Tuesday amid speculation of a ceasefire agreement, but newswires revealed that the chances of a deal are far, increasing the likelihood of an US attack as Trump’s deadline approaches. The GBP/USD trades at 1.3241, still above its opening price.

Sterling trims gains as Trump deadline nears while deal odds fade

Risk appetite deteriorates amid the escalation of the conflict in the Middle East. Oil prices are rising, but the Greenback has failed to gain traction, despite its positive correlation with WTI, as the US Dollar Index (DXY), which measures the buck's performance against a basket of six currencies, is down 0.14% to 99.84.

Earlier, the US attacked Kharg Island, while Iran retaliated on US interests in the UAE, Iraq and Saudi Arabia. Newswires reported that diplomatic talks between the US and Iran were closed, but the Tehran Times denied those allegations, saying that “Diplomatic and indirect channels of talks with the US are not CLOSED.”

Data in the US revealed that Durable Goods Orders in February contracted for the second consecutive month, by 1.4%, below estimates for a 0.4% expansion, while core goods exceeded estimates of 0.7%, expanding by 0.8% MoM in the same period.

New York Fed President John Williams commented that the energy shock will drive up overall inflation. “I expect headline inflation to actually be elevated, you know, in the middle of this year” and expecto to rise by 2.75% for the year. He added that monetary policy is “where it is needed to be.”

The New York Fed Survey of Consumer Expectations in March indicates that households are becoming pessimistic about higher prices, as inflation expectations for one year rose by 3.4%, up from 3% in February, while for three years, ticked up from 3% to 3.1% and for five years, remained unchanged at 3%.

Even though the GBP/USD is ripping higher, business activity in the UK services sector slowed sharply to an 11-month low in March, as the S&P Global Services PMI edged lower from 53.9 to 50.5, while a reading of input prices rose, increasing the chances for a stagflationary scenario in the UK.

Given the backdrop, the GBP/USD is trimming some of its earlier gains, while the US Dollar seems to be recovering some ground amid growing speculation that the chances for a deal are low, via MS NOW citing diplomats.

GBP/USD Price Forecast: Technical Outlook

In the daily chart, GBP/USD trades at 1.3245. The near-term bias is mildly bearish as spot holds below the confluence of the descending resistance line from 1.3869 and the clustered simple moving averages around 1.35, confirming a rejection of prior upside attempts. Price continues to oscillate beneath this moving-average band, which caps rallies and aligns with the series of lower highs traced along the downtrend line, indicating sellers retain control despite the longer-standing rising support trend from 1.3035 still underpinning the broader structure.

Immediate resistance emerges near 1.3330, where recent highs meet the descending trend line, followed by the 1.3500/1.3530 zone defined by the grouped simple moving averages and prior congestion. A daily close above that upper band would be needed to weaken the bearish tone and reopen the 1.3650 area. On the downside, initial support is seen around 1.3180, with the rising trend line from 1.3035 reinforcing the 1.3100 region as the next downside level. A break below that trend support would signal a deeper decline towards 1.3035 and expose the broader bullish structure to a more decisive reversal.

(The technical analysis of this story was written with the help of an AI tool.)