GBP/USD Gains Capped by Geopolitical Risks and Sidelining US Dollar

The British Pound (GBP) gains against the US Dollar (USD) after two days of losses, trading around 1.3500 during European hours on Thursday.

This upward push is largely due to a sharp rally in the Japanese Yen (JPY), which weighed heavily on the USD.

Market speculation suggests that Japanese authorities conducted a rate check, signaling potential direct intervention in foreign exchange markets.

A slowdown in US private-sector employment for August also contributed to the Greenback's troubles, with ADP figures showing only 38,000 positions added against an expected 47,000.

Despite this cooling labor signal, financial markets are still pricing in roughly a two-thirds probability of a Federal Reserve interest rate hike later this month.

Gains for the GBP/USD pair may remain capped as the British Pound faces its own set of headwinds, including heightened global risk aversion driven by energy market shocks from renewed hostilities in the Middle East.