GBP Weakens to Near 1.3500 as US-Iran Tensions Escalate

The British Pound (GBP) has weakened to near 1.3500 against the US Dollar (USD) in early Asian trading hours on Wednesday, as tensions escalate between the US and Iran.

The US launched strikes against targets in Iran, raising fears of a wider war, which is supporting the safe-haven status of the USD. This has caused the GBP/USD pair to decline to near 1.3510.

Bank of England (BoE) Governor Andrew Bailey downplayed the inflation threat, stating that the UK is not yet experiencing significant second-round inflation effects. Bailey said, 'We're seeing quite subdued second-round effects; I think we've seen a softening labor market for some time now.' He added, 'I've taken the view that I think we can watch this situation for the moment.'

Analysts at UOB Group maintain a cautious stance on the Pound, reiterating that while they initially expected any decline to be contained within a 1.3550/1.3645 range, the risk remains on the downside, and the level to watch is 1.3480.