Pound Sterling to Dollar Forecast: GBP Rebounds as Iran Deal Hopes Hit USD

Modified: Saturday, 30 May 2026 16:41 BST - Written by Frank Davies

STORY LINK Pound Sterling to Dollar Forecast: GBP Rebounds as Iran Deal Hopes Hit USD

The Pound to Dollar exchange rate (GBP/USD) rebounded from intraday lows as improving sentiment surrounding US-Iran negotiations weighed on the US Dollar and encouraged investors back into risk-sensitive assets. Hopes that progress could eventually lead to the reopening of the Strait of Hormuz helped curb safe-haven demand for the Greenback, allowing Sterling to recover ground.

GBP/USD Forecasts: Rebound from Daily Lows

The Pound to Dollar (GBP/USD) exchange rate dipped to near 1.3400 early in Europe on Friday before recovering strongly to above 1.3475 during US trading as the dollar lost ground amid hopes that the US and Iran could secure some form of deal.

According to UoB; “GBP is unlikely to break the strong resistance at 1.3480. Support is at 1.3435.

It added; “A breach of 1.3415 would indicate that GBP is more likely to range-trade rather than continuing to rebound.”

Traders were reluctant to maintain aggressive positions into the weekend and there was also an element of choppy trading with month-end position adjustment also having an impact.

There was further choppy trading on Iran headlines with traders reacting to the latest comments and hopes for a deal.

Scotiabank commented; “Focus remains centered on the state of play between the US and Iran, with a renewed sense of confidence in the possibility of a deal that would reopen the Strait of Hormuz. Details include a 60 day ceasefire extension, Iran’s removal of all of its mines from the Strait within 30 days, and the launching of further talks on Iran’s nuclear program.”

According to MUFG; “If the reported details are true and if President Trump does accept these conditions and we have a 60-day extension with, crucially, the Strait of Hormuz reopened we certainly would expect further near-term downside pressure on front-end rates and for the US dollar to weaken further.”

ING expressed some caution; “The ceasefire extension in Iran is helping markets trade optimistically again, but we ultimately need to see a reopening of the Strait of Hormuz to take the dollar much lower from here.”

The outlook for monetary policy and interest rates will also be a key element. In comments on Friday, Bank of England Governor Bailey sounded cautious on the potential for interest rate hikes.”

He noted that allowing inflation to run above the BoE's 2% target was justified given uncertainty over the economic impact of the Iran war and the weak pace of growth.” He did add; “that tolerance would weaken if signs of second-round effects begin to emerge.”

According to Kirstine Kundby-Nielsen, senior FX strategist at Danske Bank "I don't expect the Bank of England to hike to the extent that it's priced by market."

She added; "The UK economy isn't in great shape. If we get close to a ceasefire, some of these underlying macroeconomic developments start taking focus again."

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TAGS: Pound Dollar Forecasts