Key events today:

06.05 12:15 UTC: USD – ADP Non-Farm Employment Change.

On May 6, the pair is trading near 1.3580–1.3595, recovering for the second consecutive day due to general Dollar weakness. Improving expectations surrounding a potential US-Iran agreement are reducing demand for the Greenback as a safe-haven asset, while falling oil prices ease fears of a new inflationary impulse in the US. This makes the Fed’s stance less certain and supports demand for currencies with a stronger interest rate history.

The Pound is receiving additional support from expectations regarding Bank of England policy. The market is pricing in the possibility of a rate hike this year as the regulator remains focused on persistent inflation. High British bond yields reflect an increased risk premium but, in the short term, make the Pound more attractive to yield-oriented investors.

Risks for the British currency remain significant: local elections will take place on May 7, which could increase pressure on the government and raise questions about fiscal discipline. Furthermore, the weakness of the UK economy limits the room for further rate hikes. Nevertheless, the current fundamental backdrop remains moderately positive for GBP/USD; therefore, the preference remains for buying.

Recommendations: BUY 1.3585, SL 1.3555, TP 1.3675.