Pound Stabilizes as Weak US Data Counterbalances Iran Risk
The British pound held steady against the US dollar on Tuesday, despite ongoing geopolitical tensions in the Middle East. This stability is attributed to weak US economic data, which has offset safe-haven demand for the greenback.
Recent services PMI and consumer confidence figures came in below expectations, leading markets to price in a higher likelihood of Federal Reserve rate cuts. According to the CME FedWatch tool, markets now price in a 60% chance of a rate cut by September, up from 50% a week earlier.
This repricing has provided a tailwind for the pound, which had been under pressure earlier in the session. However, the pound's upside remains limited by geopolitical uncertainty following Iran's recent military actions and the potential for further escalation in the region.