GBP/USD Steady Amid Dollar Pressure and Global Risks
GBP/USD saw limited movement in the Asian session, with sterling tending to stall around the 1.35 area while the US dollar remained near a one-and-a-half-week high. Reuters reported that the greenback remained firm as the standoff between the US and Iran maintained interest in the dollar, while oil prices returned above US$100 per barrel, adding to concerns about global inflation. Market data compiled by Indonesian media also showed GBP/USD hovering around 1.3501 on Thursday morning in Asia.
Sterling's cautious movement suggests the market lacks a compelling reason to push the pound higher in the short term. On the one hand, the extension of the US-Iran ceasefire has eased market pressure. However, on the other hand, peace negotiations remain stalled, the US blockade of Iran remains in effect, and maritime incidents in the Strait of Hormuz have restored a sense of security to support the dollar. This situation makes it difficult for GBP/USD to post more convincing gains.
Pressure on sterling also comes from the fact that the dollar is currently supported by expectations that US interest rates will likely remain high for longer. Reuters notes that economists now see the Federal Reserve likely to hold interest rates for at least another six months, as surging energy prices have dashed hopes of an imminent rate cut. When the dollar is supported by a combination of safe-haven sentiment and yields, the room for GBP/USD to strengthen automatically narrows.
Therefore, the current direction of GBP/USD remains consolidative. Sterling hasn't completely lost its resilience, but it also doesn't have enough momentum to break higher as long as the dollar remains strong and geopolitical risks persist. The market's next focus will be on US economic data, the direction of energy prices, and whether Middle East tensions have truly eased or worsened. (Zaf)
Source: Newsmaker.id
