Pound Retreats from Multi-Week High as Hormuz Tensions Boost Dollar
The British pound has retreated from its multi-week high against the US dollar due to escalating tensions in the Strait of Hormuz. Geopolitical uncertainty has driven investors towards the safe-haven greenback, which is perceived as a stable store of value during times of crisis.
As a result, the dollar index rose, weighing on major currencies like the pound. The shift in risk sentiment has reversed some of the gains made by GBP/USD earlier this month, supported by improving UK economic data and expectations that the Bank of England would maintain a cautious approach to rate cuts.
The Relative Strength Index (RSI) has cooled from overbought levels, suggesting that the correction may have room to run. However, the fundamental backdrop remains supportive for the pound, given its relative strength compared to the eurozone.