Pound Slips on Middle East Tensions and US Jobs Fears

The British pound slipped to $1.3438 on Friday as traders weighed rising Middle East tensions and braced for the US jobs report.

Markets are watching whether fighting linked to Iran and its allies could disrupt shipping through the Strait of Hormuz, a key route for global oil flows. Oil prices have not yet skyrocketed, Brent was slightly lower around $82 a barrel, but geopolitical tension can still lift demand for the dollar as a perceived safe haven.

The bigger near-term swing factor is US nonfarm payrolls, which economists in a Reuters survey expect rose by 80,000 last month after June's 57,000 gain. If jobs growth surprises on the upside, traders often push up short-term US Treasury yields, because they start penciling in a higher chance the Federal Reserve keeps rates tighter for longer.

The UK side looks comparatively 'set': the Bank of England held rates last week, and markets were pricing only about 25 basis points of tightening by year-end, with no fully priced hike until the BoE's February 2027 meeting. With few UK-specific catalysts until next week's GDP data, sterling can end up taking its cue from US data and global headlines.