Category: Forex News, News
The Pound Sterling resists Trump’s chaos on Iran
The Pound Sterling (GBP) showed some resilience against the US Dollar (USD), holding gains from the previous week’s recovery, when the Bank of England (BoE) opted for a hawkish hold. The pair’s outlook remains mildly bearish as US-Iran talks on a potential de-escalation or ceasfire remain clouded in uncertainty.
Pound Sterling held the recent range
GBP/USD extended its bearish consolidation phase into a second straight week as the bull-bear tug-of-war continued in the face of looming risks surrounding the Middle East war and renewed expectations of BoE rate hikes this year.
The week started with the war in the Gulf having entered into a new phase of escalation after the United States (US) and Iran traded fresh threats over the reopening of the Strait of Hormuz, targeting civilian and energy infrastructure, while Israel planned for “weeks” more fighting.
The persistent risk-off flows kept the haven demand for the USD underpinned, while weighing on the Pound Sterling.
However, markets witnessed a complete 360-degree turnaround later on Monday after US President Donald Trump extended his ultimatum for Iran to reopen the Strait of Hormuz within 48 hours, citing “productive talks” with Iran as the reason behind a likely pause in attacks for five days.
Risk sentiment rebounded firmly, helping GBP/USD stage an impressive relief rally from near the 1.3250 region toward 1.3500.
But Iran’s Foreign Ministry denied having “any negotiations or talks with the US during the past 24 days of the imposed war.” The constant dismissal of any peace talks from Tehran kept a lid on the risk-sensitive Pound Sterling when compared to the USD.
On Tuesday, the UK Consumer Price Index (CPI) report for February confirmed that headline inflation remained at 3% for February, unchanged from the January rate. The data had limited impact on the Pound Sterling as it did not yet account for the surge in energy prices triggered by the Middle East war.
Later in the week, Reuters reported that “the US is seeking a month-long ceasefire in its war on Iran and had sent a 15-point plan to Iran for discussion, raising hopes for a resumption of oil exports out of the Persian Gulf.”
The hopes for a Mideast ceasefire weighed heavily on Oil prices and eased concerns over higher inflation and interest rates, undermining the Greenback once again, while cushioning the downside in the GBP/USD pair.
Heading into the weekend, investors remained on edge due to the uncertainty and confusion over negotiations on a potential ceasefire and the chances of further escalation in the Middle East war.
The Greenback consolidated weekly gains on Friday amid looming risks of a US ground military operation on Iran’s Kharg Island as early as this weekend.
The Wall Street Journal (WSJ) reported late Thursday, citing defence department officials with knowledge of the planning, that the Pentagon is looking at sending up to 10,000 additional ground troops to the Middle East to give US President Donald Trump more military options. This happens, ironically, even as Trump extended the pause on his threat to attack Iran’s energy infrastructure for ten days until April 6.
About the UK economy, data on Friday showed that British Retail Sales volumes fell by 0.4% on the month in February, less than the 0.7% decline expected by economists. The data had a limited impact on the currency pair, as the number doesn’t show the potential dip in consumer spending due to the war.
All eyes on Powell, Payrolls and Mideast War
It’s a holiday-shortened week, with clocks turning back in Europe and a data-sparse UK docket. This week will be dominated by economic data from the US.
On Monday, Fed Chairman Jerome Powell is due to participate in a moderated discussion at Harvard University in Massachusetts. His comments will be closely monitored for the central bank’s path forward on interest rates.
The US employment data will start trickling in from Tuesday, with the all-important Nonfarm Payrolls (NFP) report due on Good Friday.
Before that, the US JOLTS Job Openings Survey, ADP monthly Employment Change and ISM Manufacturing PMI will entertain traders.
Beyond the statistics and speeches from the Fed officials, developments on the US-Iran war will be key to shaping the direction of markets in the upcoming week.
GBP/USD technical analysis
The near-term bias stays weakly bearish as spot holds beneath the declining 21- and 50-day Simple Moving Averages (SMAs) and below the flatter 100- and 200-day SMAs, which cap the upside around the mid-1.34s. This configuration signals persistent selling pressure after the recent slide from the 1.36 area, with shorter SMAs now reinforcing a downward tilt against a broader range-bound backdrop. The Relative Strength Index (RSI) at 43 remains below the 50 midline, aligning with a downside bias rather than an oversold condition and leaving room for further extension lower if support gives way.
Immediate resistance emerges at the 21-day SMA near 1.3370, followed by the 100-day SMA around 1.3420 and then the 200-day SMA close to 1.3430, where a break would be needed to ease bearish pressure and reopen 1.3500. On the downside, initial support sits at the recent low near 1.3220, and a clear drop below this area would expose the 1.3150 region next. As long as price trades below the clustered SMAs in the 1.34 zone, rallies are vulnerable to selling into these resistance layers.
(The technical analysis of this story was written with the help of an AI tool.)
Pound Sterling FAQs
The Pound Sterling (GBP) is the oldest currency in the world (886 AD) and the official currency of the United Kingdom. It is the fourth most traded unit for foreign exchange (FX) in the world, accounting for 12% of all transactions, averaging $630 billion a day, according to 2022 data.
Its key trading pairs are GBP/USD, also known as ‘Cable’, which accounts for 11% of FX, GBP/JPY, or the ‘Dragon’ as it is known by traders (3%), and EUR/GBP (2%). The Pound Sterling is issued by the Bank of England (BoE).
The single most important factor influencing the value of the Pound Sterling is monetary policy decided by the Bank of England. The BoE bases its decisions on whether it has achieved its primary goal of “price stability” – a steady inflation rate of around 2%. Its primary tool for achieving this is the adjustment of interest rates.
When inflation is too high, the BoE will try to rein it in by raising interest rates, making it more expensive for people and businesses to access credit. This is generally positive for GBP, as higher interest rates make the UK a more attractive place for global investors to park their money.
When inflation falls too low it is a sign economic growth is slowing. In this scenario, the BoE will consider lowering interest rates to cheapen credit so businesses will borrow more to invest in growth-generating projects.
Data releases gauge the health of the economy and can impact the value of the Pound Sterling. Indicators such as GDP, Manufacturing and Services PMIs, and employment can all influence the direction of the GBP.
A strong economy is good for Sterling. Not only does it attract more foreign investment but it may encourage the BoE to put up interest rates, which will directly strengthen GBP. Otherwise, if economic data is weak, the Pound Sterling is likely to fall.
Another significant data release for the Pound Sterling is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period.
If a country produces highly sought-after exports, its currency will benefit purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.
Written by : Editorial team of BIPNs
Main team of content of bipns.com. Any type of content should be approved by us.
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