British Pound steadies as weak US data counters Iran risk

The British Pound remained relatively stable on Tuesday, as geopolitical tensions in the Middle East and weak US economic data weighed on markets. The GBP/USD exchange rate traded at 1.3547. President Donald Trump stated that no talks were currently ongoing with Iran, and the US naval blockade was still in place, with the Strait of Hormuz remaining open.

An Iranian adviser told Fars that Iran remains committed to logic and dialogue, but will not negotiate surrender. Iran's Foreign Minister claimed that the US goal for war is Iran's surrender, adding that "America is begging to negotiate with us now." US Housing Starts in July declined 12.4% month-over-month, with mortgage rates surging since the conflict began and home prices rising.

Meanwhile, the Federal Reserve reported that Industrial Production for the month of July fell slightly from the expected 0.3% to 0.2% month-over-month. In the UK, unemployment rose above estimates to 4.9% in June. The BoE's interest rate decision will be closely watched on Wednesday as eyes turn to the Consumer Price Index (CPI) data, with expectations of UK headline inflation at 2.9% year-over-year, up from 2.6%, and core CPI at 2.5% YoY, down from 2.6%.

Money markets indicate a 72% chance the BoE holds rates steady at the September 17 meeting, with a similar 78% probability for December. For the US, traders await the latest FOMC Meeting Minutes for insights into the central bank's interest rate path. On the technical side, GBP/USD is holding near the 1.3550 level, retaining a bullish near-term bias while staying above a cluster of trend-line levels and the 1.3381 moving average.

Support is seen at the recent trend-line break around 1.3502, followed by the former resistance at 1.3414 and the moving average level at 1.3381. The next major resistance lies at the higher upward trend-line break near 1.3603, which could lead to further gains should the pair break above this barrier.