British Pound softens to near 1.3500 as US, Iran escalate attacks

The British Pound (GBP) experienced a decline to near 1.3510 during early Asian trading hours on Wednesday, as escalating tensions between the United States and Iran provided support to the US Dollar (USD) as a safe-haven currency. Market participants will be closely monitoring the US August jobs report later on Friday. According to CNBC, the US and Iran engaged in a fresh round of attacks on Tuesday, with American forces targeting Iranian installations near a crucial waterway and Iran retaliating by launching operations against US interests across the region.

President Donald Trump claimed the strikes were in response to Iran's attempts to place mines in the strategic waterway and a previous attack on a US military base. He warned of additional attacks if Tehran retaliates. Bank of England Governor Andrew Bailey dismissed the prospect of significant second-round inflation, stating that the United Kingdom is not yet experiencing notable inflationary effects.

Analysts at UOB Group have taken a cautious approach to the Pound, noting that any decline could potentially extend to the 1.3480 level if the GBP remains below 1.3600. Currently, GBP/USD is trading within the 1.3443-1.3550 range, holding above the 100-day simple moving average (SMA) and the lower Bollinger Band, which suggests a mildly bullish outlook for the near term.