GBP Edges Lower Ahead of Fed, BoE Decisions Amid Easing Middle East Tensions

The pound slipped lower against the dollar on Monday as investors waited for key decisions from the Federal Reserve and the Bank of England. The EUR/USD pair, however, held its gains against the dollar.

ING FX strategist Francesco Pesole noted that the escalation in the Middle East has taken markets more seriously, causing a drop in oil prices to around $92 a barrel. This decrease in oil prices is likely due to reports of negotiations between Iran and Oman over the Strait of Hormuz, as well as a second day without renewed fighting between Iran and the US.

Pesole stated that it would take relatively little for oil prices to push above $100 a barrel, potentially reaching $120 if geopolitical tensions flare again. Unless hostilities end and negotiations gain traction, ING expects the dollar to strengthen further in the near term.