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Pound sterling hit a ceiling against the dollar as oil prices found a floor and started to recover amidst the realisation the Strait of Hormuz is still closed.
Pound-dollar rallied by more than a per cent at one stage on Wednesday as markets welcomed a ceasefire between Iran and the U.S. and hoped it meant crude oil and natural gas would soon flow out of the Middle East.
However, the dollar recovered some of its early losses and oil found a floor when it became clear the ceasefire was a ceasefire in name only: hostilities continue and the Strait of Hormuz - through which the oil and gas must exit the region - was still shuttered by Iran.
U.S. President Donald Trump acknowledged overnight "a real agreement" was yet to be agreed; a sobering admission for markets.
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Secure Your Rate Before It Moves"Global markets remained focused on the uncertain ceasefire between the United States and Iran on Thursday, with oil prices rebounding after their sharpest daily drop in years as tanker traffic through the Strait of Hormuz stayed heavily disrupted," says Shane Strowmatt at LGT Private Bank.
Oil fell on Wednesday when markets thought a ceasefire would mean Iran would open the Strait of Hormuz, but on the day, just three ships transited the key artery.
That limited GBP/USD gains at 1.3488, which is a peak that has blocked the exchange rate's advance on numerous occasions in 2026.
This is also where we come across the 100-day moving average, a technical indicator that can often prompt traders to enter or exit trades. In this instance, it has been associated with cutting back exposure in pound-dollar upside.
That resistance now looks to be the top of a post-ceasefire range, with a growing likelihood that the pair retreats below here again in the event that oil prices steadily recover.
Under such a scenario, a retreat back to 1.3250 becomes likely in the short-term. Those with USD transfers should request their payment provider locks in a portion of their exposure at current levels to protect against near-term downside (learn more here).
"Focus remains on energy markets, as tensions in the Middle East continue to weigh on oil supply disruptions and market sentiment," says a daily note from Danske Bank. "With stirring doubts regarding the longevity of the deal we saw the greenback slowly crawl back, as well as equities softening a tad and risky assets in general retrace some of the earlier moves."
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- Iran says there will be no ceasefire implementation while this happens.
- Oil prices climb as the Strait of Hormuz remains shut to traffic.
- U.S. President Donald Trump said on Truth Social overnight that more work needs to be done to reach a "real agreement". U.S. forces will remain on standby as a result.
- Markets nevertheless remain cautiously optimistic: an Iranian delegation will arrive in the Pakistani capital, Islamabad, on Thursday night for talks to resolve the conflict with the U.S. and Israel.