Pound Under Pressure, Dollar Strengthens After Trump Speech
The pound sterling weakened against the US dollar in Thursday's Asian session, with the GBP/USD pair dropping to the mid-1.3200s after previously touching the 1.3345 area. Selling pressure intensified following a speech by US President Donald Trump, which was seen as dampening hopes for de-escalation, while simultaneously boosting the dollar through a combination of risk-off sentiment and rising expectations for tighter US monetary policy.
In his speech, Trump reiterated a two- to three-week deadline and threatened to target Iran's energy infrastructure if no deal is reached, although he also stated that negotiations are progressing well. Tehran quickly denied these claims, while reports of the United Arab Emirates pushing for military action to reopen the Strait of Hormuz added to fears of escalation. These developments triggered a spike in oil prices, rekindling inflation concerns and fueling speculation of a potential Fed interest rate hike, which in turn supported the US dollar.
From the UK's perspective, risks also increased as the economy is considered vulnerable to energy price shocks related to the Iran conflict. Furthermore, the Bank of England's hawkish signal regarding the possibility of an interest rate hike as early as April amid inflation concerns is seen as adding risks to the growth outlook, weighing on the pound. This combination of factors reinforces the scenario of a continuation of the GBP/USD weakening trend that has persisted in recent months. (asd)
Source: Newsmaker.id
