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GBP weakens below 1.3500 as US launches new wave of strikes against Iran

  • GBP/USD softens to near 1.3470 in Friday’s Asian session.
  • The US launched a new wave of strikes against Iran for a sixth day in a row.
  • Traders still ramp up their bets on BoE rate hikes this year.

The GBP/USD pair trades on a softer note around 1.3470 during the Asian trading hours on Friday. Geopolitical tensions in the Middle East trigger risk-off market sentiment and weigh on the Cable. The preliminary reading of the Michigan Consumer Sentiment Index for July is due later on Friday.

The United States (US) has carried out major strikes on Iran for the sixth day in a row. Officials in southern Iran’s Bandar Abbas reported that civilian infrastructure, including power facilities and a train station, has been hit.

The US Central Command (CENTCOM) said that the attacks were intended to “further degrade Iranian military capabilities” before saying it had boarded a vessel as part of its blockade of the strait. Earlier this week, US President Donald Trump threatened to strike Iran’s bridges and power plants if the country did not return to talks. Rising tensions in the Middle East could boost a safe-haven currency such as the US Dollar (USD) against the British Pound (GBP). 

Data released on Tuesday showed that US Consumer Price Index (CPI) inflation slowed in June, while data from Wednesday showed a decline in the Producer Price ‌Index (PPI). Traders are now pricing ‌in nearly a 55% chance that the Federal Reserve (Fed) will hike rates in September, according to the CME FedWatch Tool.

On the UK front, Bank of England (BoE) Governor Andrew Bailey said on Tuesday that he was concerned about the resumption of hostilities between the US ‌and Iran in recent days, but so far, there has been no big impact on the UK inflation outlook. Money markets are fully pricing in a BoE hike by the November policy meeting, with a second rate hike priced in by April 2027, according to Reuters.

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AUD moves away from three-week top as geopolitics and Fed hike bets lift USD

  • AUD/USD attracts some sellers for the second straight day amid a modest USD uptick.
  • Escalating US-Iran tensions, reviving inflation fears, and Fed hike bets underpin the buck.
  • The RBA’s relatively hawkish stance and steady data from China could support the AUD.

The AUD/USD pair remains on the back foot for the second straight day and slides to the 0.7980 region during the Asian session on Friday. Nevertheless, spot prices seem poised to register gains for the third week in a row and remain within striking distance of a nearly three-week high, touched on Wednesday.

The US Dollar (USD) looks to build on the previous day’s goodish recovery from a nearly one-month low amid a combination of supporting factors and exerts some downward pressure on the AUD/USD pair. Further escalation of tensions between the US and Iran keeps geopolitical risk in play. Furthermore, concerns about energy-driven inflation revive bets for a US Federal Reserve (Fed) rate hike in 2026 and underpin the safe-haven Greenback.

In the latest developments surrounding the Middle East crisis, the US stepped up its attacks on Thursday and carried out a sixth consecutive night of air strikes against Iran. The US also struck an empty oil tanker headed for Kharg Island as part of its renewed naval blockade of Iranian ports. Tehran responded by attacking US military facilities across the region, raising fears of a return to all-out war and triggering the global flight to safety.

Iran’s Islamic Revolutionary Guard Corps had threatened to expand the conflict by targeting additional regional energy supply routes. Furthermore, Reuters reported that Iran has asked Yemen’s Houthis to stand ready to close the Red Sea oil route, posing a potent new threat to global energy supplies. This remains supportive of elevated crude oil prices, fueling inflation fears and bolstering bets for at least one Fed rate hike by the year-end.

Market expectations were reaffirmed by Thursday’s upbeat US Initial Jobless Claims data and the Philly Fed Manufacturing Index. Adding to this, Dallas Fed President Lorie Logan called on Thursday for modestly higher interest rates to win a battle the central bank has been losing for the past five years. Separately, Fed Vice Chair Philip Jefferson said that he would be open to raising rates if inflation does not show near-term improvement.

The aforementioned fundamental backdrop favors the USD bulls and backs the case for a further depreciating move for the AUD/USD pair. However, the Reserve Bank of Australia’s (RBA) relatively hawkish stance, along with steady economic data from China, could lend support to the China-proxy Australian Dollar (AUD), warranting caution before placing aggressive bearish bets on the currency pair and positioning for deeper losses.

US Dollar Price Today

The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the Australian Dollar.

USDEURGBPJPYCADAUDNZDCHF
USD0.00%0.07%0.03%-0.04%0.17%0.09%0.00%
EUR-0.01%0.07%0.00%-0.07%0.17%0.09%-0.01%
GBP-0.07%-0.07%-0.09%-0.14%0.09%0.03%-0.08%
JPY-0.03%0.00%0.09%-0.06%0.16%0.06%-0.01%
CAD0.04%0.07%0.14%0.06%0.22%0.14%0.04%
AUD-0.17%-0.17%-0.09%-0.16%-0.22%-0.09%-0.18%
NZD-0.09%-0.09%-0.03%-0.06%-0.14%0.09%-0.09%
CHF-0.00%0.01%0.08%0.01%-0.04%0.18%0.09%

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).

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Japanese Yen softens on renewed US-Iran tensions, Japan flags intervention risk

  • USD/JPY trades with mild gains around 162.40 in Friday’s Asian session. 
  • The US is carrying out major strikes on Iran for the sixth consecutive day, lifting the US Dollar. 
  • Japan’s Katayama said authorities are ready to act on currency moves whenever necessary. 

The USD/JPY pair posts modest gains near 162.40 during the Asian trading hours on Friday. The US Dollar (USD) strengthens against the Japanese Yen (JPY) as the United States (US) launches a new wave of strikes against Iran for a sixth night in a row. Traders will keep an eye on the preliminary reading of the Michigan Consumer Sentiment Index for July later on Friday. 

The US Central Command (CENTCOM) said on Thursday that it launched a new wave of strikes against Iran for a sixth night in a row, per the BBC. The US military said that the attacks were intended to “further degrade Iranian military capabilities” before saying it had boarded a vessel as part of its blockade of the Strait of Hormuz.

Iran’s state media reported US missiles struck close to the island of Qeshm, near the strait, as well as in Bandar Abbas and Bushehr, the site of a nuclear power plant. Earlier this week, US President Donald Trump threatened to strike Iran’s bridges and power plants if the country did not return to talks. Renewed Hormuz hostilities could boost the Greenback against the JPY in the near term. 

Kyodo News Agency reported on Friday that the Japanese government will state in its economic blueprint that decisions on specific monetary policy tools should be left to the Bank of Japan (BoJ). A final version of the blueprint will also state that the government will reach a decision “by early August” on whether and by how much Japan will cut 8% consumption tax levied on food.

Traders remain on alert for possible intervention from Japanese officials. Japan’s Finance Minister Satsuki Katayama said on Friday that the authorities are ready to act on currency moves whenever necessary. 

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Chinese Yuan loses as safe-haven demand lifts US Dollar

  • USD/CNH climbs as rising Middle East tensions drive investors toward the US Dollar as a safe-haven asset.
  • Iran told Houthi rebels to block the Red Sea oil route if the US attacks Iranian infrastructure.
  • Economists and an adviser say China can stabilize growth by fast-tracking already-budgeted national infrastructure projects this year.

USD/CNH gains ground for the second successive day, trading around 6.7760 during the Asian hours on Friday. The pair appreciates as the US Dollar (USD) receives support from escalating developments surrounding conflicts in the Middle East.

Reuters reported on Thursday that Iran has instructed Yemen’s Houthi militia to stand ready to close the critical Red Sea oil route if the United States strikes Iranian power infrastructure, presenting a potent new threat to global energy supplies. Amplifying these concerns, the Tasnim news agency reported explosions in Bandar Abbas, Qeshm, and Ahvaz, while very loud explosions were also heard in Kuwait and as far away as Basra.

These geopolitical flare-ups follow threats made earlier this week by US President Donald Trump, who stated the US would strike Iran’s bridges and power plants next week if the country does not return to the negotiating table. Ultimately, these signs of escalating tensions in the Middle East could boost safe-haven currencies like the US Dollar, potentially creating a strong tailwind for the USD/CNH pair in the near term.

China can stabilize its economic growth this year by fast-tracking already-budgeted national infrastructure projects, according to economists and a government adviser. This approach reduces the likelihood of large-scale fiscal stimulus. The strategy allows Beijing to counter an unexpected, broad decline in investment—which recent data showed has dragged down growth—while maintaining strict control over local government spending, per Reuters.

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GBPUSD up 0.1% after better-than-expected UK GDP data

08:00 AM, United Kingdom, monthly GDP report:

  • UK GDP Estimate YoY Actual 1.3% (Forecast 1.2%, Previous 1.2%)
  • UK GDP Estimate MoM Actual 0.1% (Forecast 0%, Previous -0.1%)
  • UK Manufacturing Production MoM Actual 0.1% (Forecast -0.2%, Previous 0.4%)

The UK economy continues its steady, post-recession expansion, marking its sixth consecutive month of rolling three-month growth. While the broader trend remains highly positive, momentum slowed slightly heading into the summer, influenced by global supply chain disruptions stemming from the geopolitical conflict in Iran. Figure 1: Contributions to three-month GDP growth, UK, May 2025 to May 2026

Source: Gross domestic product (GDP) monthly estimate from the Office for National Statistics Key Performance & Sector Breakdown

  • Overall GDP: Grew 0.7% in the three months to May 2026 (down slightly from 0.8% in April), but managed a modest 0.1% tick-up in the month of May itself.
  • Services (The Growth Engine) : Grew 0.7% in the three months to May. Growth was powered by Information & Communication (up 2.5%) and professional services—specifically scientific R&D (up 5.1% in May), driven by medical sciences.
  • Production & Manufacturing: Rose 0.1% over the three months. Manufacturing was the standout sub-sector (up 1.6%), led by pharmaceuticals. However, this was weighed down by sharp declines in energy and water utilities.
  • Construction: Grew 1.6% over the three months, buoyed by private commercial projects. However, it contracted 0.8% in May, dragged down by a 5% drop in private housing repair and maintenance.

The pound reacted positively to the reading, though it wasn’t able to break out of the current range between 1,3520 and 1,3550. GBPUSD is tradining closely to the 10-hour exponential moving average (EMA10 on an H1 chart; yellow), slowing down after dynamic gains thruought the yesterday’s session.

Source: xStation5

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Euro consolidates near four-week top, above mid-1.1400s amid mixed Fed cues, geopolitics

  • EUR/USD struggles to attract follow-through buying amid mixed fundamental cues.
  • Receding Fed rate hike bets keep USD bulls on the defensive and support spot prices.
  • Escalating US-Iran tensions and inflation fears help limit USD losses, capping the pair.

The EUR/USD pair holds steady above the 1.1450 level during the Asian session on Thursday and consolidates its strong gains registered over the past two days, to the highest level since June 18.

The US Dollar (USD) struggles to attract any meaningful buyers and languishes near a four-week low, touched on Wednesday following the release of the US Producer Price Index (PPI). In fact, the US Bureau of Labor Statistics (BLS) reported that the PPI unexpectedly fell 0.3% in June. This comes on top of a soft US Consumer Price Index (CPI) report on Tuesday and further prompts traders to trim their bets for an immediate rate hike by the US Federal Reserve (Fed). The outlook, in turn, keeps USD bulls on the defensive, which is seen as a key factor acting as a tailwind for the EUR/USD pair.

Meanwhile, the US-Iran conflict has intensified since the beginning of this week, with US forces launching a fresh round of airstrikes targeting Iranian missile and drone infrastructure on Wednesday. Tehran, on the other hand, has responded with retaliatory drone and missile attacks on US-linked military facilities across the region. Adding to this, the US naval blockade of Iranian ports and the closure of the Strait of Hormuz support elevated crude oil prices. This fuels concerns about energy-driven inflation and revives hawkish Fed expectations, limiting USD losses and capping the EUR/USD pair.

Traders now look forward to the US economic docket – featuring monthly Retail Sales, the Philly Fed Manufacturing Index, and the usual Weekly Initial Jobless Claims. This, along with speeches from influential FOMC members, would drive the USD demand and provide some impetus to the EUR/USD pair. Nevertheless, the aforementioned mixed fundamental backdrop warrants some caution before placing fresh bullish bets and positioning for any further appreciating move.

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South Korean Won edges up against US Dollar as BoK hikes interest rates

  • The South Korean Won ticks up against the US Dollar as BoK raises interest rates for the first time in three-and-a-half years.
  • The BoK was expected to hike policy rates to counter persistent inflationary pressures.
  • Traders have dialed down the Fed’s interest rate hike expectations as US inflation cools down.

The South Korean Won (KRW) reflects broader strength against the US Dollar (USD) as the Bank of Korea (BoK) delivers its first interest rate hike in three-and-a-half years, raising rates by 25 basis points (bps) to 2.75%. The USD/KRW pair gives back slight early gains and ticks down to near 1,484.68 in the Asian trade on Thursday.

The pair will likely remain firm as the BoK has kept the door open for further interest rate hikes, in an attempt to stabilize a slumping KRW and tame persistent price pressures. “We will respond until inflation stabilizes to BoK’s target level,” BoK Governor Hyun-Song Shin said in a statement. Shin added, “Demand side price pressure may need careful monitoring as it can turn into stronger inflationary pressure if robust increase in Gross Domestic Income (GDI) sustained.”

The Asian currency has been outperforming the US Dollar for over two weeks, as market participants had already priced in an interest rate hike by the BoK.

Meanwhile, the US Dollar strives to regain ground after a sharp sell-off in the last two trading days. As of writing, the US Dollar Index (DXY), which gauges the Greenback’s value against six major currencies, trades marginally higher to near 100.50.

The USD Index fell sharply in the past two trading days as soft United States (US) inflation figures on both the retail and the wholesale level have forced traders to reconsider Federal Reserve (Fed) interest rate expectations.

According to the CME FedWatch tool, the odds of the Fed delivering an interest rate hike in the July meeting have dropped significantly to 10.2% from 31% recorded a week ago.

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British Pound weakens below 1.3550 on renewed US strikes on Iran

  • 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.