The GBP/USD pair is showing a cautious rebound from the 1.3155 level, or the zone of a four-month low reached during the Asian session, and appears to have snapped a five-day losing streak. The rate has climbed back above the 1.3200 level; however, further upward potential remains limited amid escalating tensions in the Middle East. Reports that US President Donald Trump sees progress in negotiations to end US military operations against Iran have provided some short-term support to the market, although threats of new strikes on energy infrastructure and demands to reopen the Strait of Hormuz persist.

Iran, in turn, has made it clear that it is not ready for direct dialogue with the United States, highlighting the fragility of the diplomatic process and weakening hopes for a quick de-escalation. Against this backdrop, energy prices remain elevated, increasing inflation risks and supporting expectations of a tight monetary policy from the US Federal Reserve. Market participants are already pricing in more than a 50% probability of a Fed rate hike in 2026, which helped the US dollar reach a new yearly high on Tuesday and is likely to restrain more significant gains in GBP/USD.

Additional pressure on the pound comes from the UK economy's vulnerability to energy price shocks related to the Middle East conflict. At the same time, hawkish signals from the Bank of England about a possible rate hike as early as April—amid inflation risks—are heightening concerns about an economic slowdown, making investors more cautious about opening new bullish positions in the pound.

Under these conditions, the market will likely want to see a convincing continuation of buying before concluding that spot prices have formed a short-term bottom.

Later in the North American session, US JOLTS job openings data and the Conference Board consumer confidence index may influence the dollar and create short-term trading opportunities in GBP/USD. However, geopolitical developments remain the key driver of market sentiment.

From a technical perspective, oscillators are negative, and the pair is trading below all moving averages. However, it is worth noting that the 100-day and 200-day SMAs have flattened, indicating the possibility of sideways movement and leaving bulls with at least a short-term chance.