Pound Weighed Down by Oil and Interest Rates!
The pound sterling weakened to around US$1.335 after previously touching a three-week high. Pressure arose as investors weighed rising tensions in the Middle East, soaring oil prices, and inflation risks that could influence the direction of interest rate policy.
Tensions escalated after the United States military resumed its attacks on Iran. President Donald Trump also reimposed a blockade on Iranian vessels and proposed a 20% fee to maintain security in the Strait of Hormuz. This situation has raised market concerns about the smooth flow of global energy.
Rising oil prices are a major concern because they could push inflation higher. If inflation rises again, central banks could potentially maintain high interest rates for longer or raise them again. Markets are now almost entirely expecting the Bank of England to raise interest rates in September, with two additional hikes already being factored in for 2026.
From the United States, pressure also came from comments by Fed Governor Christopher Waller. He warned that the Fed may need to raise interest rates in the near future if inflation remains above its 2% target. This statement has reinforced hawkish sentiment in global markets.
In addition to economic factors, investors are also closely monitoring developments in British politics. Andy Burnham is expected to become the new leader of the Labour Party after the leadership contest ends on Friday, and is said to have a chance of being officially appointed prime minister next Monday.
As a result, the pound remains under pressure on the market as long as the US dollar is supported by safe-haven sentiment and expectations of high interest rates. If oil prices continue to rise and the central bank becomes increasingly hawkish, GBP/USD could struggle to strengthen again in the near future. (asd)
Source: Newsmaker.id
