- GBP/USD softens to around 1.3530 in Thursday’s early Asian session.
- The US military launched another wave of strikes against Iran.
- Rising tensions in the Middle East have prompted traders to increase bets on BoE rate hikes this year.
The GBP/USD pair declines to near 1.3530 during the early Asian session on Thursday. The British Pound (GBP) weakens against the US Dollar (USD) as renewed conflict and shipping disruptions in the Strait of Hormuz have reignited energy-driven inflation risks. Traders brace for the UK monthly Gross Domestic Product (GDP) report and the US Retail Sales data, which are due later on Thursday.
The US military said it has launched another wave of strikes against Iran in a further effort to keep the Strait of Hormuz open, per the Guardian. Explosions were reported late on Wednesday on Iran’s Qeshm Island, Bandar Abbas, and locations in the Sistan-Baluchestan province.
Iran’s top negotiator, Mohammad Bagher Ghalibaf, said that if Iran did not benefit from its memorandum of understanding with the United States, “We have no reason to adhere to such an understanding.” Rising tensions in the Middle East could boost a safe-haven currency such as the Greenback and act as a headwind for the major pair in the near term.
Andy Burnham is expected to be officially named UK Prime Minister on July 20, pushing the focus onto his choice of finance minister, given the nation’s shaky public finances.
Traders raise their bets on rate hikes from the Bank of England (BoE) this year, given the expected impact on inflation from higher oil prices.
Money markets are fully pricing in a hike by the November policy meeting, with a second rate hike priced in by April 2027, according to Reuters. Before the US-Iran war, traders had been expecting the BoE to lower interest rates twice this year.
