– Written by


Minesh Chaudhari

STORY LINK GBP/USD News, Forecast: Sterling Supported by Resilient Labour Market Data

The Pound to US Dollar (GBP/USD) exchange rate remained confined to a narrow range on Tuesday as investors digested the latest UK labour market figures.

At the time of writing, GBP/USD was trading at around $1.3427, little changed from the opening levels of Tuesday’s session.

The Pound (GBP) traded with limited direction on Tuesday as encouraging employment figures offset lingering concerns over the outlook for UK government borrowing costs.

Data released by the Office for National Statistics (ONS) showed the unemployment rate unexpectedly held steady at 4.9% in May, defying forecasts for a rise to 5%.

The report also revealed a much stronger-than-expected increase in employment, with 147,000 new jobs created compared with expectations for a slowdown to around 85,000.

The resilient labour market strengthened expectations that the Bank of England (BoE) could still consider another interest rate increase before the end of the year, helping to underpin Sterling.

However, gains remained capped after UK gilt yields moved higher in response to comments from Prime Minister Andy Burnham, who suggested his government would seek greater fiscal flexibility while remaining within existing budget rules.

The US Dollar (USD) found support on Tuesday as investors continued to monitor the worsening security situation in the Middle East.

Expectations that the renewed conflict would quickly de-escalate have faded, with markets increasingly preparing for a prolonged period of instability that could keep global energy prices elevated.

Sentiment was further rattled after President Donald Trump vowed a forceful response to the deaths of three US service personnel in Jordan, while Iran tightened its control over shipping through the Strait of Hormuz.

The deterioration in geopolitical conditions encouraged demand for traditional safe-haven assets, lending additional support to the US Dollar.

Near-Term GBP/USD Forecast: UK Inflation Figures Awaited

Looking ahead to Wednesday, the UK’s latest consumer price index is expected to be the main driver of movement in the Pound to US Dollar (GBP/USD) exchange rate.

Economists expect headline inflation to ease again in June. If confirmed, the data could reduce expectations for further Bank of England policy tightening and place renewed pressure on Sterling.

Meanwhile, with few notable US economic releases scheduled, the US Dollar is likely to remain heavily influenced by geopolitical developments. Any further escalation in tensions across the Middle East could increase demand for the safe-haven ‘Greenback’.

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– Written by


Frank Davies

STORY LINK Pound Sterling to Dollar Forecast: Middle East Tensions Push GBP Back Below 1.34

The Pound to Dollar exchange rate (GBP/USD) has slipped back to around 1.3380 as renewed Middle East tensions boosted demand for the safe-haven US Dollar.

Escalating military action between the US and Iran has lifted oil prices and increased concerns over global inflation, helping the Greenback recover while limiting Sterling’s ability to build on its recent gains.

GBP/USD Forecasts: Energy Fears Limit Pound Buying

The Pound to Dollar (GBP/USD) exchange rate has consolidated just above 1.3450 with markets monitoring domestic and international developments. Unease over the Middle East situation has helped underpin the dollar and curbed Pound buying while markets are waiting for key economic evidence.

Oil prices spiked higher in Asian trading on Monday amid further US strikes on Iran while there have been on-going Iranian attacks on shipping through the Strait of Hormuz.

According to UoB; “GBP has likely entered a range-trading phase between 1.3385 and 1.3495.”

Domestically, Andy Burnham has been confirmed as Prime Minister with an immediate focus on economic policy and the appointment of the next Chancellor.

The UK 10-year yield is just below the 5.00% level.

Scotiabank commented; “The greatest near-term risk lies with the UK’s fiscal outlook and Burnham’s plans around the prior government’s self-imposed fiscal rules.”

Nevertheless, the bank maintains a positive outlook on the Pound; “the latest pullback has revealed near-term resistance around 1.3550. We are bullish and note the potential for additional resistance closer to 1.3600. We look to a near-term range bound between 1.3420 and 1.3520.”

Overall interest in high-yield instruments has been sustained despite the Middle East situation.

MUFG commented on potential risks; “higher yields on offer in the UK come at a time when financial market conditions are supportive for carry trades given FX volatility is close to year-to-date lows. The recent rebound in energy prices and the correction lower for AI-related equities has not yet threatened current stable financial market conditions, although they are two obvious risks that could trigger an unwind of popular FX carry trades if they intensify further.”

ING expressed concerns over energy prices and expects firm dollar demand; “We are particularly focused on natural gas prices, which are now very close to their March highs again. And there is increasing focus on refined products, such as diesel, where higher prices can only add to fears of inflationary pressures being handed down global supply chains.”

According to the bank; “higher energy prices mean that the Fed will have to remain alert, and in this environment we struggle to see that any investors already owning dollars will be inclined to sell.”

MUFG added; “The renewed military strikes are disrupting energy supplies through the Strait of Hormuz. The IRGC Navy stated yesterday it had halted four unidentified vessels attempting to use an “unsafe route” after disregarding warnings. The unfavourable developments are leading to pick-up in global inflation risks and will put more pressure on central banks including the Fed to tighten policy this year.”

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The US Dollar to Yen exchange rate is trading around 162.66, close to July’s high of 162.84 and its strongest levels in decades.

The pair has gained from around 159.36 at the start of June, although it remains narrowly lower for July after briefly falling to 160.65 earlier this month.

ING believes USD/JPY could break above the 162.75-162.85 resistance area over the coming sessions as higher energy prices support the Dollar and increase pressure on Japan’s trade position.

Deteriorating news from the Gulf has pushed oil, natural gas and refined-product prices higher, reinforcing inflation concerns and reducing investors’ willingness to sell existing Dollar positions.

ING said it was “slightly surprising not to see the dollar a little stronger”, particularly as higher energy prices mean the Federal Reserve must remain alert to renewed inflation pressure.

Japan is particularly exposed to rising energy costs because it relies heavily on imported oil and gas. That backdrop can weaken the Yen while supporting currencies of energy exporters, including the US Dollar.

The bank also noted that Japanese authorities did not intervene during Monday’s Marine Day holiday, leaving traders free to test the upper end of the recent USD/JPY range.

According to ING, “it would not be a surprise to see USD/JPY briefly break above 162.75/85 over coming sessions” if the Bank of Japan remains absent from the market.

ING expects the broader Dollar index to find support near 100.50 and potentially recover towards 101.30, with persistent Gulf tensions and elevated energy prices limiting the scope for near-term Dollar weakness.