GBP Weakens as Markets Wary of Energy Inflation
Global markets entered risk-off mode during the Asian session on Tuesday (March 3, 2026). The main trigger: the escalation of the Middle East conflict, which has driven up energy prices and investors are seeking safe assets. In such conditions, money typically flows to the most liquid instruments and the USD is a key player.
The dollar strengthened and reclaimed its safe-haven status. Reuters noted that the Dollar Index rose to around 98.49, the previous gain being the largest in several months, as the market viewed the US as relatively better protected from oil shocks (the US is a net energy exporter) than energy importing countries.
The impact on GBP/USD: the pair hovered around 1.3400, with bearish pressure still present. Simply put: as long as the USD is sought after, the pound will struggle to rise much—rebounds tend to stall, and the market focuses on guarding against downside risk. Reuters also cited sterling at around $1.3407 in the Asian session.
In Asia, the yen also remains weak at around 157 per dollar because Japan is a net energy importer. If oil prices rise, import costs increase, imported inflation becomes more pronounced, and the yen usually suffers. Reuters reported that Japanese officials reiterated their monitoring of the yen's movements with great urgency, including the option of intervention if necessary
For stock markets, the combination of rising oil and inflation fears has tended to put pressure on Asian indices. Reuters described most Asian and European stock markets as falling 1–3% yesterday as markets weighed the effects of the war on energy costs and the global economy.
The prevailing narrative is "inflation shock vs. safe haven." Typically, when geopolitics heats up, bonds are sought after. But this time, the energy surge has also made investors fear rising inflation, so there was a moment when bonds were less strong than usual. Reuters said the bond market was confused: buy for safety, or sell for inflation.
In commodities, gold continued to strengthen Reuters noted that gold rose for the fifth consecutive session, with spot gold around $5,377/oz at the start of the Asian session, as safe haven demand rose again.
In conclusion, today's Asian market session is following a single theme: geopolitical headlines → rising oil premiums → rising inflation fears → risk-off. As long as the energy shock persists and the conflict persists, the short-term bias is likely to be: USD strong, GBP/USD restrained, JPY fragile, risky stocks volatile, and gold stable.(Cp)
Source: Newsmaker.id
