The Pound Sterling opened the week weaker after a weekend oil shock in the Middle East lifted the US Dollar. GBP/USD traded at 1.3369, down over 0.20%, as safe-haven demand and inflation worries pulled the pair below 1.3400.
The Pound gave up ground against the Dollar to start the week, with GBP/USD trading at 1.3369, down over 0.20%. Over-the-weekend developments in the Middle East drove Oil prices higher, and that jump fueled inflationary pressures.
Safe-haven demand lifts the Dollar
The Dollar drew support from rising safe-haven demand as tensions between the US and Iran intensified. During early European hours on Monday, GBP/USD pared some losses to trade around 1.3390, yet the pair stayed under pressure as the US Dollar gained ground.
The oil move behind the shift was sharp. Brent crude rose nearly 4% to trade above $79 per barrel after fresh attacks between the US and Iran in the Gulf, alongside statements from the Iranian regime that it had closed the Strait of Hormuz.
Cable slips below 1.3400
Cable found some support near 1.3370 after a modest gap-down opening, but it lacked bullish conviction and held below 1.3400. The pullback stalled for now after retreating from a nearly four-week high around the 1.3450 area touched on Friday.
The Greenback’s recovery kept weighing on the Pound through the session. GBP/USD slipped to three-day troughs around 1.3360 and returned to the area below its 200-day SMA, which leaves the door open to a deeper retracement in the near term.
Source: FXStreet
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