GBP/USD Forecast: Dollar Softens on Iran Ceasefire Extension News

Modified: Wednesday, 22 April 2026 20:36 BST - Written by Ben Hughes

STORY LINK GBP/USD Forecast: Dollar Softens on Iran Ceasefire Extension News

The Pound to US Dollar (GBP/USD) exchange rate moved higher during Wednesday’s trading session, supported by easing geopolitical tensions.

At the time of writing, GBP/USD was trading close to $1.3528, up roughly 0.2% from the start of the day.

The US Dollar (USD) weakened on Wednesday as a slight improvement in market sentiment reduced demand for the safe-haven currency.

This shift followed an announcement from US President Donald Trump confirming an extension to the existing ceasefire with Iran.

Despite this, the downside in the ‘Greenback’ was limited, as uncertainty still lingers. The US continues to enforce restrictions on Iranian shipping, while Tehran has yet to formally agree to the extended truce, leaving investors cautious.

The Pound (GBP) found some support against the US Dollar but remained largely directionless versus other currencies after the release of the UK’s latest inflation figures.

Data from the Office for National Statistics indicated that headline inflation rose from 3% to 3.3% in March, marking its first increase in several months and reflecting higher global energy costs.

However, core inflation unexpectedly eased from 3.2% to 3.1%, suggesting that underlying price pressures may be softening.

This mixed picture limited Sterling’s upside, as investors judged that the figures are unlikely to prompt an immediate change in policy from the Bank of England (BoE), with policymakers expected to maintain a wait-and-see approach on interest rates.

Short-Term GBP/USD Forecast: PMI Data in Focus

Looking ahead, the next potential driver for the Pound to US Dollar exchange rate will be the UK’s upcoming PMI releases.

Early estimates for April are forecast to show a slowdown in private sector activity, with the impact of geopolitical tensions and higher energy costs weighing on business conditions.

At the same time, the US Dollar is expected to remain sensitive to broader market sentiment.

If confidence continues to improve on the back of Middle East developments, the US Dollar may face further pressure, while any renewed tensions could quickly restore demand for the safe-haven currency.

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