The Pound Sterling weakened against the US Dollar on Tuesday after reported attacks on two ships in the Strait of Hormuz revived demand for the Greenback. GBP/USD traded at 1.3373, down 0.11%, as higher Oil prices stoked fresh Fed rate-hike worries.
The Pound Sterling retreated against the US Dollar on Tuesday as Middle East tensions escalated, with GBP/USD trading at 1.3373, down 0.11%. Reports of attacks on two ships in the Strait of Hormuz pushed traders back toward the Greenback.
Oil spike drives the Dollar bid
The US Dollar held steady after the Islamic Revolutionary Guard Corps attacked ships that tried to pass through the Omani route despite repeated warnings. Higher energy prices followed, lifting the Dollar because costlier Oil could push the US Federal Reserve toward an interest rate hike. The US Dollar Index rose 0.05% to 100.93.
US data added to the picture. The Goods and Services Trade Balance deficit widened to $-77.6 billion in May, up from $-54.6 billion in April, driven by rising imports and falling exports. Separately, the New York Fed survey showed one-year inflation expectations climbing to 3.7% in June from 3.5% in May.
Rate-hike odds and UK politics
Money markets have lifted the chance of a September rate hike to 60.42%. For the July 29 meeting, there is a nearly 75% chance the Fed keeps rates unchanged, suggesting the inflation picture still leaves policymakers cautious.
The UK economic calendar stayed empty, yet Sterling drew some support from the reaction in Oil, which has moved with the Dollar and weighed on the Pound. The likely next Prime Minister, Andy Burnham, reiterated a commitment to the fiscal rules, easing trader fears that extra spending could jolt UK gilts and hurt GBP/USD.
Where the technicals sit
On the daily chart, GBP/USD traded at 1.3375 with a mildly bearish tone, capped below the 50/100/200-day simple moving average cluster at 1.3403. The pair sits between rising support anchored near 1.3159 and descending resistance at 1.3511, with the Relative Strength Index near 55.
A sustained break above 1.3403 would open the path toward 1.3511. A daily close below the 1.3159 support line would reinforce the bearish bias and expose losses toward the mid-1.31 region.
Source: FXStreet
Trading involves risk.
Risk Disclaimer
