British Pound hits three-week low as US yields, Iran risks weigh
The Pound Sterling fell by some 0.11% and hit a three-week low against the Greenback on Wednesday, even though the US Dollar Index (DXY) is in red territory, following US jobs data that were below estimates but signalled some cooling in the labour market.
The British Pound experienced a three-week low against the US Dollar on Wednesday, despite US yields remaining elevated due to Federal Reserve Chair Kevin Warsh's recent remarks and concerns over potential inflation. The GBP/USD exchange rate dropped to 1.3500 following weaker-than-expected US jobs data in August. Geopolitical tensions between the US and Iran amplified fears of a second wave of inflation.
The US and Iran engaged in strikes, while US President Donald Trump maintained that Iran was not prepared for a deal. In response to these concerns, the UK Finance Minister, Jeremy Hunt, announced that he would present his first budget on October 28, adhering to the borrowing rules set by his predecessor Rachel Reeves. Investors are anticipating a Bank of England rate hike in December, with a total of 32 basis points of tightening expected by the end of the year.
The GBP/USD pair held a modestly constructive bias, trading above its simple moving average triple around 1.3442 and was supported by the absence of a clear upward or downward trend. However, a breach of key support levels could weaken the current positive sentiment and trigger a deeper correction to lower levels.
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