On Thursday, major currency pairs including EUR/GBP, GBP/USD, and NZD/USD experienced notable movements as market sentiment shifted towards risk-on, driven by optimism over potential progress in US-Iran peace negotiations and easing oil prices. Reports from Al-Hadath and Al Arabiya indicated that intense communications are underway to gradually reopen the Strait of Hormuz, a critical passage for nearly 20% of global energy supply, which has contributed to improved global risk sentiment and subdued demand for the safe-haven US Dollar [1][2][3].
The GBP/USD pair traded 0.18% higher around 1.3620 during the European session, supported by a weaker US Dollar and positive risk sentiment. The US Dollar Index (DXY) was down 0.1% near 97.90, with the USD showing the largest weakness against the New Zealand Dollar. S&P 500 futures were also marginally higher at around 7,370, reflecting increased appetite for risk assets [2]. Technical analysis for GBP/USD indicated a bullish bias, with the pair holding above the 20-period EMA at 1.3518 and the Relative Strength Index at 61.4, suggesting sustained upward momentum. Key resistance is seen at the 78.6% Fibonacci retracement near 1.3719 [2].
The EUR/GBP cross remained flat around 0.8641, confined within its one-week range as traders awaited the UK local election results and assessed the impact of Middle East developments. Polls suggested that Prime Minister Keir Starmer’s Labour Party could face heavy losses, potentially increasing UK political uncertainty and weighing on the British Pound. The interest rate differential between the European Central Bank (2.15%) and the Bank of England (3.75%) continues to support the GBP, but the technical outlook for EUR/GBP remains bearish, with resistance at 0.8687 and 0.8703, and support at 0.8600 [1].
Meanwhile, the NZD/USD pair extended gains for the third consecutive day, reaching a session high of 0.5983, as hopes for a US-Iran peace deal and lower oil prices buoyed the New Zealand Dollar. News that Tehran is reviewing a 14-point peace plan submitted by the US, along with positive comments from US President Donald Trump about talks with Iran, further lifted sentiment. Lower crude prices (WTI just above $90, Brent below $100) provided additional support to the NZD, as New Zealand is an oil-importing economy [3].
Looking ahead, the US Nonfarm Payrolls (NFP) data for April, due on Friday, is expected to be a major trigger for currency markets, influencing expectations for the Federal Reserve’s monetary policy. The CME FedWatch tool indicates that the Fed is likely to hold interest rates steady through year-end [2]. In the US, ADP Employment figures showed a larger-than-expected increase in job creation in April, setting a positive precedent for the NFP report [3].
CONCLUSION
Currency markets responded positively to reports of progress in US-Iran peace talks and lower oil prices, resulting in a weaker US Dollar and gains for the GBP, EUR, and NZD. Technical and fundamental factors suggest continued risk-on sentiment, though upcoming US Nonfarm Payrolls data may influence future market direction. Political uncertainty in the UK and central bank policy differentials remain key factors to watch.