GBP Surges Amidst US-Iran Tensions and Thin Trading
The British Pound has risen by over 0.23% amidst thin trading conditions due to the US Labour Day weekend holiday, while the escalating tensions between the US and Iran have kept energy supply fears elevated.
The Strait of Hormuz has seen both countries exchanging strikes, with the US launching attacks on three Iranian tankers in retaliation for the IRGC targeting US Navy warships. The UK's Chancellor Healey announced plans to give regions more power to attract private investment and pledged fiscal discipline, which helped restore Britain's credibility in the bond market.
The USD Index has dropped 0.29% at 98.87, with traders' attention focused on the upcoming release of US inflation prints on the consumer and producer side. A benign reading could deter the Federal Reserve from raising rates, while a jump in inflation could push the Fed to raise rates, contrary to President Trump's preference for lower interest rates.
The GBP/USD trades at 1.3541, maintaining a modest bullish bias as it holds above the simple moving average cluster around 1.3461 and has reclaimed former descending trend-line resistance near 1.3369 as support.