Sterling Today: Pound-Dollar Surges on US-Iran Deal Hopes

Modified: Thursday, 7 May 2026 10:51 BST - Written by David Woodsmith

STORY LINK Sterling Today: Pound-Dollar Surges on US-Iran Deal Hopes

The Pound US Dollar (GBP/USD) exchange rate pushed sharply higher on Wednesday, buoyed by renewed confidence that the conflict in the Middle East may soon ease.

At the time of writing, the pair was trading near $1.3622, up roughly 0.6% from the start of the day.

The US Dollar (USD) came under notable pressure on Wednesday, with a brighter market mood curbing demand for safe-haven assets.

The shift followed comments from US President Donald Trump, who pointed to meaningful progress in discussions with Iran and indicated that a 'final agreement' could be close.

Further support for this view came from reports suggesting that negotiators are closing in on a framework that could bring an end to hostilities and restore the flow of trade through the Strait of Hormuz.

As hopes for de-escalation strengthened, investors moved back into riskier assets, weighing heavily on the appeal of the ‘Greenback’.

Sterling held firm on Wednesday following the release of the UK’s finalised services PMI figures.

The index for April was revised up from 52 to 52.7, with stronger demand – particularly in tech-related industries – helping to lift activity.

Despite the improvement, the upside for the Pound was somewhat restrained as the report also flagged ongoing cost pressures linked to elevated energy prices and lingering uncertainty tied to the Middle East situation.

Near-Term GBP/USD Forecast: Politics and Payrolls to Drive Movement

Looking ahead, developments in the Middle East will continue to shape sentiment, but other factors are likely to influence the Pound to US Dollar (GBP/USD) exchange rate later in the week.

In the UK, attention will turn to local elections, where a poor outcome for Labour could reignite concerns over Prime Minister Keir Starmer’s leadership and unsettle markets.

Meanwhile, in the US, the spotlight will be on the latest payrolls report.

A weaker-than-expected reading may dampen expectations for further tightening from the Federal Reserve, potentially applying additional downward pressure on the US Dollar.

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TAGS: Pound Dollar Forecasts