GBP Falls Despite Fading Political Risk Amid Stagflation Concerns

The British Pound (GBP) has been falling for the second consecutive day, trading around 1.3450 during Asian hours on Friday.

Analysts at Scotiabank note that despite UK political risk fading, fundamentals seem less supportive of the GBP due to renewed softening in yield spreads.

Rising oil prices have reignited fears of sticky inflation and sluggish economic growth in the UK, putting pressure on the Bank of England (BoE) to address the 'stagflationary' dilemma.

The US Dollar (USD) is gaining strength, propelled by renewed safe-haven demand among global investors, as escalating tensions in the Strait of Hormuz create skepticism about shipping route stability.