• GBP/USD falls 0.30% as reports of a strike on Iran's Bushehr plant boost haven demand.
• UK CPI holds near 3%, while core inflation rises to 3.2%, keeping price pressures elevated.
• Markets now price higher-for-longer rates, with no Fed cuts and BoE hikes increasingly discussed.

The Pound Sterling reverses course on Wednesday as the Greenback edges higher on the day as risk appetite deteriorates following news reports that Iran's nuclear Bushehr power plant was hit, according to Press TV. Also, benign inflation readings in the UK pushed the GBP/USD lower, losing 0.30% and trading near 1.3370.

Geopolitics, to drive GBP/USD price action

Hostilities in the Middle East conflict extended with Israel and Iran exchanging blows, while the US adopt a diplomatic stance, eyeing the beginning of peace talks in Islamabad, Pakistan.

Iran's rejected the US proposal, adding that five conditions must be fulfilled to end the war, which included halt to aggression by the enemy, the establishment of concrete mechanisms to ensure that the war is not reimposed on Iran, guarantedd and clearly defined payment of war damages and reparations, the conclusion of the war across all the fronts, and Iran's exercises of sovereignty over the Strait of Hormuz.

UK's inflation remains hot, yet the Pound slumped

Inflation in the UK remains near 3% YoY in February, unchanged from January's reading and as expected. The Core Consumer Price Index (CPI) edged up a tenth to 3.2% YoY, and both prints are above the Bank of England (BoE) 2% goal.

Before the US-Israel-Iran conflict, the BoE projected that the CPI would reach 2% by April. But last week, the UK central bank upward revised its inflation projections to 3.5% by the middle of 2026.

Citi's survey in the UK revealed that Britons are turning pessimistic about inflation, as inflation expectations rose from 3.3% to 5.4%, the largest increase in more than 20 years.

Financial markets eyeing higher rates amongst major central banks

Global bond yields rose over the last two days as investors grew less confident that major central banks, such as the Federal Reserve and the Bank of England, would lower rates in 2026.

Money markets had priced in 46 basis points of rate increases for the BoE, while for the Fed, investors expect no rate cuts, pricing in a minuscule 4 basis points of tightening.

On Thursday, the UK economic docket will feature speeches by BoE members Greene and Taylor. In the US, Initial Jobless Claims for the week ending March 21 are expected, along with speeches by Fed's Cook, Miran, Jefferson, Logan and Barr.

GBP/USD Price Forecast: Technical outlook

In the daily chart, GBP/USD trades at 1.3370. The near-term bias is mildly bearish as spot holds below the clustered simple moving averages around 1.3500, signaling a loss of upside momentum after repeated failures near the descending resistance line from 1.3869. The pair continues to respect this downward-sloping barrier, keeping rallies capped beneath the mid-1.36 area and reinforcing a sequence of lower highs. The upward support trend line from 1.3035 still underpins the broader structure, but the latest closes closer to that line than to the moving average cluster suggest sellers retain the initiative in the short term.

Initial resistance stands at the confluence of the 1.3500 region and the nearby moving averages, with a break there needed to ease the current downside bias and expose 1.3560 and the recent highs near 1.3650. On the downside, immediate support is aligned with the rising trend line from 1.3035, now coming in just below 1.3350, and a clear break beneath this area would open a deeper pullback toward 1.3300 and then 1.3220. A daily close back above 1.3500 would be the first signal that bearish pressure is fading, while a sustained move below the trend-line support would confirm scope for an extended corrective phase.

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