USD Weakness Deepens on Ceasefire Hopes | GBP Outlook Amid Strong UK GDP & Geopolitical Risk

Key Highlight

• The US dollar continues to weaken, marking its longest losing streak since 2006, driven largely by improving sentiment around potential US–Iran ceasefire progress.

• Stronger-than-expected UK GDP has offered limited support to sterling, with markets cautious about forward-looking risks.

• Central banks remain alert, with intervention signals from Japan and Switzerland highlighting ongoing currency volatility.

Market Recap

The US dollar extended its decline for a ninth consecutive session as optimism grew around a possible extension to the US–Iran ceasefire. While political commentary has suggested the conflict may be nearing resolution, some market participants remain wary that the pace of USD selling may not fully reflect underlying economic fundamentals.

In contrast, risk-sensitive currencies benefited from the improved sentiment. The Australian dollar climbed to multi-year highs, while GBP saw modest gains against the USD but remained relatively stable versus the euro.

Elsewhere, policymakers signalled readiness to act where needed. Japanese officials reiterated their willingness to intervene to support the yen, and Switzerland echoed a similar stance on the franc. In the UK, Bank of England commentary indicated a more measured approach to further rate hikes, aligning with current market expectations.

Market Update

Geopolitics continues to steer market direction. If ceasefire discussions progress into a confirmed extension, the current pressure on the US dollar could persist. However, any breakdown in negotiations may quickly reverse recent moves, particularly given concerns that markets may have overextended.

For sterling, the stronger GDP reading is encouraging but hasn’t materially shifted sentiment. Markets appear to be focusing on what lies ahead rather than backward-looking data. The broader economic impact of Middle East tensions—especially through energy prices and business confidence—will likely become clearer in the coming months and play a more decisive role in GBP performance.

Looking ahead, US economic data remains key. Today’s jobless claims and regional business activity figures will be closely watched. Any signs of softening in the US labour market could reinforce expectations of a more dovish Federal Reserve, adding further downside pressure to the dollar.

16th April 2026

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