• GBP/USD advances as Axios report fuels risk appetite.
• US ADP jobs beat estimates, but markets focus on Iran headlines.
• UK political risks rise as local election results approach.

GBP/USD rises by over 0.59% on Wednesday after an Axios report revealed that the US and Iran are closing in on a deal to end the war. The Greenback fell on the news, even though US jobs data crushed estimates, which could prompt the Federal Reserve to focus on inflation. The pair trades at 1.3614 after bouncing off daily lows of 1.3531.

Pound rallies as Iran peace hopes outweigh strong US jobs

Sentiment turned positive after Axios reported that the US and Iran are discussing a 14-point, one-page memorandum of understanding (MOU). If signed, the MOU would end the war, enter a 30-day period of negotiations, open the Strait of Hormuz and limit Iran’s nuclear program. On the US front, the US Treasury will unfreeze Tehran’s funds.

In the US, the labour market continued to show signs of strength and resilience as revealed by Automatic Data Processing (ADP). The ADP National Employment Change posted its largest increase in 15 months in April, rising by 109,000, exceeding forecasts of 99,000 and March’s downwardly revised 61,000.

Although the data is Dollar-positive, the Greenback is on the defensive as long as oil prices continue to fall, with WTI tanking over 7% on news of Iran. The US Dollar Index (DXY), which measures the performance of the buck’s value against six currencies, is down 0.49% at 98.00.

Recently, St. Louis Fed Alberto Musalem stated that risks to monetary policy have shifted towards higher inflation. He said that “there are plausible scenarios that would require rates to remain stable for some time,” adding that “current policy is either neutral or slightly accommodative in real terms.”

In the UK, political turmoil was sparked by the former UK ambassador to the US, Peter Mandelson, exerting pressure on PM Keir Starmer. Starmer’s party is bracing for losses in local elections, which increases speculation that he could be replaced.

Data-wise, the S&P Global Services PMI expanded as expected, yet UK firms witnessed the largest increase in prices paid in three and a half years in April.

On Thursday, the UK economic schedule is absent, but the results of the local elections could grab the headlines. In the US, traders' eyes will be on Initial Jobless Claims and speeches by Federal Reserve officials.

GBP/USD Price Forecast: Technical outlook

In the daily chart, GBP/USD trades at 1.3598. The pair retains a constructive near-term bias while holding above the latest reading of the simple moving average cluster (50-, 100- and 200-day SMA composite) at 1.3415, which now underpins the advance together with the longer-term rising trend line drawn from 1.3035. The broad technical tone is further supported by the ongoing recovery away from the recent mid-1.33s consolidation, even as the downwards-sloping resistance line from 1.3869 still caps the broader topside for now.

On the topside, initial resistance is defined by the descending trend line coming from 1.3869, and a clear break above this barrier would open the way for a more sustained recovery. On the downside, immediate support is seen near the 1.3598 area as a short-term pivot, followed by stronger demand at the triple simple moving average cluster around 1.3415; a loss of this area would expose the rising structural support line off 1.3035.

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