British Pound Forecast: GBP/USD Presured by Weak UK Jobs Data, US-Iran Tensions

– Written by


James Fuller

STORY LINK British Pound Forecast: GBP/USD Presured by Weak UK Jobs Data, US-Iran Tensions

The Pound US Dollar (GBP/USD) exchange rate moved modestly lower on Tuesday as renewed uncertainty in the Middle East encouraged investors to seek the safety of the US Dollar.

At the time of writing, GBP/USD was trading at around $1.3527, slightly below Tuesday’s opening levels.

The US Dollar (USD) strengthened on Tuesday, building on the recovery it began late on Monday as worsening geopolitical sentiment prompted investors to favour traditional safe-haven assets.

The latest source of concern was the expiry of the 60-day US-Iran Memorandum of Understanding without either a permanent peace agreement or an extension being secured, while the Strait of Hormuz remained closed.

With uncertainty surrounding the future of energy shipments through the region mounting, Brent crude prices climbed back above $90 a barrel during Tuesday’s session.

Tensions were further heightened after US President Donald Trump threatened military action against Oman should it obstruct negotiations with Iran, with the Gulf nation involved in separate efforts to facilitate the reopening of the strategically important waterway.

The Pound (GBP) came under additional pressure on Tuesday after the latest UK employment figures pointed to a loss of momentum across the labour market.

Office for National Statistics (ONS) data showed the unemployment rate remained unchanged at 4.9% in the three months to June, falling short of expectations for a decline to 4.8%. Employment growth also slowed sharply towards the end of the second quarter.

The accompanying figures revealed that real wage growth had eased as well, adding to the pressure on Sterling as investors scaled back expectations that the Bank of England (BoE) will raise interest rates later this year.

Near-Term GBP/USD Forecast: UK Inflation and Fed Minutes in Focus

Looking ahead, the publication of the UK’s latest consumer price index on Wednesday will provide the next major catalyst for the Pound to US Dollar (GBP/USD) exchange rate.

Later in the session, USD investors will turn their attention to the minutes from the Federal Reserve’s July policy meeting.

Although new Fed Chair Kevin Warsh has moved away from offering detailed forward guidance, markets are likely to scrutinise the minutes for indications of how policymakers view the outlook for interest rates over the coming months.

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TAGS: Pound Dollar Forecasts