Pound Sterling rose against the US Dollar, with GBP/USD trading near 1.3590 and up 0.61%. It extended gains to about 1.3515 in Asian trading on Tuesday.
The pair strengthened as market mood stayed supportive of riskier assets, following comments from US President Donald Trump and Vice President JD Vance about talks with Iran on a permanent ceasefire. The US Dollar weakened after a hot US inflation report that came in below forecasts for a higher reading.
GBP/USD started the week weaker and fell to around 1.3380, then recovered during Monday’s session. It closed near 1.3510, up 0.35% on the day.
This move took the pair to its highest level since late February and back above 1.3500 for the first time since the sell-off after the Iran conflict began. It has risen more than 350 pips from the early April low near 1.3160.
The rebound has erased about half of the drop from the year-to-date high near 1.3870. The FXStreet content team produces and oversees all content published on FXStreet.
We recall this time last year, in April 2025, when optimism surrounding the US-Iran ceasefire negotiations fueled a significant rally in the Pound Sterling. This push towards the 1.3590 level was also helped by a weakening US Dollar, which was reacting to softer than expected producer price figures. At that time, we saw a decisive break above the 1.3500 handle for the first time since the conflict-driven sell-off.
The landscape today, in mid-April 2026, presents a starkly different picture, with GBP/USD now trading closer to 1.2450. The UK is grappling with persistent core inflation, last reported at 3.1%, which is complicating the Bank of England’s path forward despite slowing GDP growth of just 0.2% last quarter. Meanwhile, the US Federal Reserve remains firm in its stance after another strong non-farm payrolls report showed the addition of 215,000 jobs last month.
This growing divergence between the Bank of England’s cautious tone and the Federal Reserve’s data-driven resolve suggests an increase in future volatility. We see traders positioning for this by purchasing at-the-money straddles on GBP/USD, which would profit from a significant price move in either direction. Implied volatility for three-month options has already ticked up from 7.2% to 8.5% over the last quarter, reflecting this market tension.
For those with a more bearish conviction on Sterling, buying out-of-the-money put options offers a defined-risk strategy to capitalize on potential weakness. We are observing increased open interest in the June expiry contracts with strike prices around 1.2300 and 1.2250. This suggests an expectation that economic headwinds in the UK could push the pair lower in the coming months.
