British Pound softens below 1.3500 as renewed US-Iran tensions favour US Dollar
The GBP/USD pair loses ground to near 1.3495 during the early Asian session on Tuesday. The British Pound (GBP) softens against the US Dollar (USD) on weak underlying UK data and US-Iran peace deal uncertainty. The US April Personal Consumption Expenditures (PCE) Price Index report will be the highlight later on Thursday.
The US military’s Central Command said late Monday that US forces have carried out strikes on southern Iran in “self-defence.” Fox News reported that two Iranian boats had been spotted laying mines in the Strait of Hormuz, and the US military also responded after a missile site targeted US warplanes.
This action came after US President Donald Trump said earlier Monday that negotiations toward a deal with Iran to end their conflict and reopen the Strait of Hormuz were "proceeding nicely.” Rising tensions in the Middle East could boost a safe-haven currency such as the Greenback in the near term.
Softer UK Retail Sales data and an unexpected rise in the Unemployment Rate to 5.0% have prompted traders to scale back expectations for future Bank of England (BoE) rate hikes by December. This, in turn, could undermine the Cable against the USD.
BoE Policymaker Alan Taylor said that an "extended hold" is likely sufficient, adding that second-round inflationary impacts are less severe than those seen during the 2022 Russia-Ukraine invasion due to a cooling domestic jobs market.
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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