GBP/USD Nears All-Time High
The pound sterling held above US$1.36 on Thursday (May 7), nearing its highest level since mid-February, as demand for the safe-haven US dollar waned. This movement was fueled by market optimism about a potential US-Iran deal that could ease tensions and lower global risk premiums.
Meanwhile, Washington reportedly sent a one-page memorandum to Iran outlining steps to gradually reopen the Strait of Hormuz and ease the US blockade of Iranian ports. Market participants are now awaiting Tehran's response, with progress in the negotiations likely to determine whether the risk-driven dollar weakening will continue.
Domestically, attention is also turning to the polls in England, Scotland, and Wales that will determine control of the Scottish and Welsh parliaments and more than half of the UK's councils. The elections are seen as a political test for Prime Minister Keir Starmer, amidst surveys indicating the Labour Party could face pressure following policy controversies and tax hikes.
Regarding monetary policy, the market now expects a tightening of around 50 basis points by the end of the year, equivalent to two interest rate hikes, lower than the previous projection of up to three hikes. This more moderate expectation serves as a balancing factor for sterling, so its future direction is likely to be determined by a combination of global dollar dynamics, geopolitical news, and central bank policy signals. (asd)
Source: Newsmaker.id
