The British pound pushed above $1.34 on Monday, reversing earlier weakness around $1.32, after U.S. President Donald Trump said he would temporarily delay strikes against Iranian energy infrastructure following what he described as "productive" discussions with Tehran.
Markets responded quickly to the announcement. UK equities and global stock indexes turned higher in the wake of the news, while crude benchmarks posted steep declines. Brent oil futures dropped 9.8% to $101.26 a barrel, and U.S. West Texas Intermediate futures fell 8.9% to $89.46 a barrel as of 13:10 GMT.
Precious metals also moved lower: spot gold declined 1.05% to $4,444.17 an ounce, and gold futures fell 2.5% to $4,492.86 an ounce.
On his social platform, the president wrote: "Based on the tenor and tone of these in depth, detailed, and constructive conversations, which will continue throughout the week, I have instructed the department of war to postpone any and all military strikes against Iranian power plants and energy infrastructure for a five day period, subject to the success of the ongoing meetings and discussions."
In separate remarks, the president told Fox Business that Iran "wants to make a deal badly and it could happen within five days or sooner."
Those comments were met with contradictory messaging from Iranian outlets. Iran's Fars News Agency, citing a source, said there were no direct or indirect communications with the United States. A senior security official, according to Tasnim News Agency, labelled the president's comments "psychological warfare."
Market participants also continue to weigh currency forecasts from major banks. Last week UBS said the British pound was likely to remain under pressure versus the U.S. dollar in the near term and lowered its June forecast to 1.34. UBS's published path for GBP/USD shows 1.34 for June, 1.37 for September, and 1.40 for December and March 2027. The firm noted resistance near 1.35, with stronger resistance around recent highs of 1.37-1.38.
The moves underscore how short-term geopolitical developments can shift flows across FX, energy, equity and metals markets as investors reassess near-term risk and asset valuations.
Key points
- GBP/USD rose above $1.34 from earlier lows near $1.32 after the U.S. announced a temporary pause on strikes against Iranian energy infrastructure.
- Brent fell 9.8% to $101.26/bbl and WTI fell 8.9% to $89.46/bbl; spot gold and gold futures also declined.
- Conflicting statements emerged from Iranian outlets about communications with the U.S., and UBS expects near-term pressure on the pound with specific forecast levels cited.
Risks and uncertainties
- Contradictory messaging between the U.S. and Iranian state outlets creates uncertainty for markets tied to geopolitical risk, notably energy and FX markets.
- The pause in strikes is conditional and time-limited; continuation or failure of talks could quickly alter oil, currency and equity prices.
- Currency outlooks remain sensitive to bank forecasts and resistance levels noted by UBS, which could cap further sterling gains in the near term.