Currently I have a Ibanez GS121 and a Fender Mustang I V2 w/ a Maxon OD808X pedal.

Before you laugh at the pedal costing more than the amp hear my plead for guidance.

I was wondering if at my current state it would be better to upgrade the guitar itself or go straight for the amp upgrade

(The amp I was looking at for a upgrade is the Orange Micro Dark Terror)
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Amp...but I'm not so sure the Micro Terror is much of an upgrade over the Mustang amp. Neither is anything special as far as tone and the Mustang amp has all the bells and whistles. I'd take an Epi Valve Jr over either any day of the week, and you could get one used for less than the others cost new.

Even then though, if it were me I'd just assume stick with the Mustang amp and keep saving, unless you have more money. You wanna upgrade, not fall in the trap that many of us have of confusing "new" gear with "better" gear. If you've got $300-$500 to spend and go used there are lotsa gems out there that sound great. But I don't think the Micro Terror was meant to be an upgrade over anything.
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The Micro Terror is just a little practice amp for your bedroom because your girlfriend thinks that having a 1/2 stack in the bedroom is ludicrous.

Lots of nice amps ~$300, and you already have a great overdrive too!
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How does your guitar feel in your hands? If you don't feel that you need something that plays better go amp. If you feel like your guitar is holding up progress get a guitar.

The Mustang is better than the Micro dark any day. The all tube Orange amps are great, the rest are over prices practice amps because they say Orange on them.
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I play metal and stuff like that in my band but I also need to have a decent-ish clean chanel as well
And I am thinking of upgrading the stock pickups to some nice Seymour duncan pickups as well, would that be worth it? or should I just spend the money saved on a better amp with the old pickups

(By the way my general price range is 600-700 overall)

and I also have no cabinet currently so that would have to be added to the equation for the price if it is just a head
And for the guitar it definitely feels great to me but I havent played anything else + I have used it for about a year and a half with no trouble and grown to enjoy how it plays
TBH, I would go and spend $700 on a new guitar first as you won't get much difference unless you go above the $500 range, maybe if you find used guitar. The Ibanez pickups are horrible, and in this price range they are beyound atrocious. A pair of SD or Dimarzio will run you about $120-$140, so you'll need to find out if it is worth spending the $ that way. Go and play some new guitars and see how they feel. Maybe even take the amp you have with you so you're sure that it sounds as you need it to sound.

Maybe something good used, if you can find a Godin Highway Strat or some kind of LTD or Schecter used.

You can get this amp which with overdrive is amazing, I record metal with mine all the time:

That'll leave you about $300 on guitar, so maybe this:

You don't have to use GC but they warranty the used sale for a month I think and ship to your door, if there's something wrong with the order I think you can take to the local store.
Either way - look these up on Craigslist or Ebay, you might be able to get better deals.
That'll be my suggestion. BTW - Godin is Canadian made so you don't get the cheap Chinese or Indonesian manufacturing and I like them as they're North American manufacturer that somehow stays below the radar while making fantastic guitars
Generally speaking, a new amp (including speaker type) would have the greatest impact on your tone. It is the foundation of your tone. You can get the best pickups money can buy, and the most expensive boutique pedals and it wouldn't make a bad amp sound good. However, a killer amp will sound good even with no pedals and a shitty guitar. I concur with Diabolical. You can get a used Valveking for about the same price or close to it as a tiny dark terror, and that OD808X would compliment it nicely.
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That is not much of a guitar. Basically it's entry level and I doubt it'll sound that nice through a tube amp. You could spend say $400 on a used guitar and the remaining $300 will get you a decent enough amp (especially used). Then you should be good for quite some time.
Moving on.....
If you play metal just get a used 6505 and put the rest into a guitar. You can prob get a decent LTD or a MIJ Jackson