- GBP/USD gathers strength to near 1.3360 in Tuesday’s Asian session.
- Renewed US strikes on Iran and fears over Strait of Hormuz shipping might cap the upside for the pair.
- BoE’s Pill said interest rates are likely to rise to keep inflation in check.
The GBP/USD pair trades in positive territory around 1.3360 during the Asian trading hours on Tuesday. However, the potential upside for the major pair might be limited amid fears of an escalating US-Iran conflict. The US June Consumer Price Index (CPI) inflation report will take center stage later on Tuesday.
US President Donald Trump said on Monday that Washington was reinstating a naval blockade on Tehran and would ensure the Strait of Hormuz remained open for a fee following fresh exchanges of missile and drone strikes, per Reuters. The US military said that US forces completed new strikes on Iranian military targets, adding that more than 50,000 US service members are currently deployed across the Middle East.
Meanwhile, the Iranian Islamic Revolutionary Guards Corps (IRGC) said on Tuesday that cooperation with the ‘aggressor enemy’ in the Strait of Hormuz will delay the reopening of the waterway and create a global energy crisis. Concerns over escalating tensions between the US and Iran could boost a safe-haven currency such as the US Dollar (USD) and cap the upside for the GBP/USD pair.
Traders ramped up bets that the Bank of England (BoE) will be forced to raise interest rates this year to keep inflation under control. BoE Chief Economist Huw Pill said that interest rates are likely to rise this year to prevent inflation from becoming entrenched.
