Sterling Fragile as Energy Risks Regain Strength
GBP/USD held around 1.321 on Monday (April 6, 2026) amid thinner liquidity due to a partial market holiday. Movements tended to be limited as market participants awaited clarity on the direction of global risk sentiment amid Middle East tensions.
The dollar's support came primarily from stronger-than-expected US employment data. March nonfarm payrolls rose by 178,000 and the unemployment rate fell to 4.3%, encouraging the view that the Fed need not rush into easing policy, keeping the dollar relatively strong against major currencies.
Geopolitical factors also maintained demand for the dollar as a safe haven. Reuters reported that US President Donald Trump gave Iran an ultimatum to reopen the Strait of Hormuz, making the market sensitive to the risk of energy supply disruptions and potential further escalation.
For sterling, energy risks are a weak point, as rising import costs could weigh on growth prospects while maintaining inflationary pressures. The UK manufacturing PMI survey showed a sharp surge in input costs, in line with supply chain disruptions and rising transportation costs related to the conflict.
The market is now awaiting the next catalyst, particularly the release of the US ISM Services PMI, which could alter interest rate expectations and the dollar's direction in the short term, as well as concrete developments surrounding the Strait of Hormuz, which could impact oil prices and risk sentiment. In the coming days, GBP/USD movements will also be influenced by how the market assesses the UK's trade-off between energy inflation pressures and growth resilience, which ultimately shapes Bank of England policy expectations. (Zaf)
Source: Newsmaker.id
