Pound reaches its highest since mid-September on Iran talks

The Pound Sterling reached its highest level since mid-September as talks between the US and Iran progressed, with crude oil prices falling on hopes of a deal. The US Dollar also fell, pushing the GBP/USD exchange rate to just under 1.3450 before retracting about two-thirds of the rise. Traders had previously anticipated possible attacks following reports that President Trump desired diplomatic negotiations with Iran to run their course.

Qatari mediators were set to visit Tehran for discussions on a draft US-Iran agreement. The Dollar's decline coincided with the rise of the Pound, with ING attributing the increase more to the currency's fall than domestic factors. Despite crude oil's drop, the pair traded between 1.3400 and 1.3450 since the Pound's peak. The Institute for Supply Management (ISM) manufacturing index reported a reading of 55.5, slightly above forecasts, but the pair failed to react to the release.

The Bank of England (BoE) is slated to announce its decision on the UK's Bank Rate at 12:00 GMT on Thursday, following a 7-2 vote to increase it from 3.75%. A hike is already priced in, making the split and remarks from BoE Governor Bailey at 12:30 GMT potentially influential. The US midterm elections take place on Tuesday, while the Nonfarm Payrolls (NFP) report is due out at 13:30 GMT on Friday, with economists anticipating a gain of 65,000 jobs, following a 29,000 increase in August.

Cleveland Fed President Hammack, one of two Fed officials who voted to raise rates on October 28, will speak at 13:50 GMT on Thursday. The jobs report and her comments may influence the Federal Reserve's decision to follow up with another hike.