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British Pound drops as geopolitical risk premium revives USD

  • Trump weighs ceasefire or broader Iran war, boosting safe-haven demand.
  • US yields rise as September Fed hike odds stay elevated.
  • Healey appointment leaves markets cautious on UK fiscal stance.

The Pound Sterling loses some ground against the US Dollar, down by 0.48%, as risk appetite in the foreign exchange markets deteriorates, with the Greenback reclaiming key technical levels in the US Dollar Index (DXY) amid the escalation of the US-Iran conflict. The GBP/USD trades at 1.3371, after reaching a daily high of 1.3455.

GBP/USD falls as Middle East escalation lifts yields and Dollar

The DXY, which tracks the buck’s value against a basket of six currencies, advances 0.14% at 101.14, as tensions in the Middle East rise. Newswires reported that Washington is demanding a longer ceasefire and partial navigation through the Strait of Hormuz, while Iran proposed a 10-day ceasefire.

A report by Axios revealed that Trump is evaluating whether to promote a ceasefire of 10-days or launch a full-scale war on Iran. In the meantime, a US official said that if Trump advocates expanding the war, the strikes will include Tehran and nuclear sites, according to Al Arabiya.

Aside from this, US data showed the ADP Employment Change 4-week average at 16.5K, below the prior revised 19.25K, amid a light economic docket during the week, with Initial Jobless Claims the most important release ahead of the Federal Reserve’s (Fed) July 29 monetary policy decision.

US Treasury yields are rising, with the 10-year T-note up three basis points at 4.624%, a tailwind for the Greenback. This signals that investors expect a Fed rate hike toward the end of the year.

Data from Prime Terminal suggests a 78% chance that the Fed will keep rates unchanged at next week’s meeting, but for September the odds for a hike are near 68%.

In the UK, John Healey was appointed as Britain's Chancellor of the Exchequer, succeeding Rachel Reeves. The new PM, Andy Burnham, named Healey after the close of the UK markets, yet the Pound has eased amid some uncertainty about the UK’s fiscal position.

Before taking office, Andy Burnham reiterated that he would stick to the fiscal rules, though he said he would use any budgetary flexibility within those rules to implement his program.

Earlier, strong UK jobs data eased pressure on the Bank of England, which could resume its easing cycle next year. Investor eyes are on Wednesday's inflation data release.

GBP/USD Price Forecast: Technical outlook

GBP/USD daily chart

In the daily chart, GBP/USD trades at 1.3371, retaining a bearish near-term bias as the pair holds just beneath the cluster of Simple Moving Averages (SMA) around 1.3374. Price also remains capped below the downward resistance trendline break level at 1.3478, while the Relative Strength Index (RSI) at 49 leans slightly negative, hinting at a lack of strong buying pressure despite the recent stabilization above the mid-1.3300s.

On the topside, immediate resistance is located at the grouped 50/100/200-period SMAs near 1.3374, followed by the descending trend-line barrier at 1.3478, with the former support-line break at 1.3511 now acting as a higher cap. With no clear structural support levels defined in the current dataset below spot, any decisive break under 1.3371 would likely expose the pair to further downside exploration until fresh demand emerges on the chart.

(The technical analysis of this story was written with the help of an AI tool. Know more.)

Pound Sterling Price Today

The table below shows the percentage change of British Pound (GBP) against listed major currencies today. British Pound was the strongest against the Japanese Yen.

USDEURGBPJPYCADAUDNZDCHF
USD0.05%0.44%0.31%0.23%-0.14%0.14%0.25%
EUR-0.05%0.39%0.28%0.21%-0.17%0.08%0.20%
GBP-0.44%-0.39%-0.11%-0.21%-0.55%-0.31%-0.19%
JPY-0.31%-0.28%0.11%-0.09%-0.43%-0.20%-0.06%
CAD-0.23%-0.21%0.21%0.09%-0.35%-0.09%0.02%
AUD0.14%0.17%0.55%0.43%0.35%0.25%0.37%
NZD-0.14%-0.08%0.31%0.20%0.09%-0.25%0.12%
CHF-0.25%-0.20%0.19%0.06%-0.02%-0.37%-0.12%

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the British Pound from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent GBP (base)/USD (quote).

Author

Christian Borjon Valencia

Markets analyst, news editor, and trading instructor with over 14 years of experience across FX, commodities, US equity indices, and global macro markets.

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