The GBP/USD exchange rate experienced a decline as market participants responded to the recent conflict in the Middle East and its economic implications. The value decreased to 1.3310, marking its lowest point since December 10 of the previous year. The GBP/USD pair has experienced a significant decline over the past few weeks as the recent rally has lost momentum. This week saw the continuation of tensions as a new conflict in the Middle East emerged, marked by the US and Iran initiating an offensive against Iran.
The recent attack has resulted in significant ramifications, leading to a sharp increase in crude oil and natural gas prices. Brent, the global benchmark, increased to $78, while West Texas Intermediate reached $72. Natural gas surged following Qatar’s decision to shut down a significant facility in response to an attack from Iran. The GBP/USD pair experienced a pullback as the US dollar index strengthened in response to the prevailing risk-off sentiment in the market. Gold and other safe-haven assets, including the Swiss franc, maintained their upward trajectory this week.
The pair also declined as market participants responded to the latest PMI data, indicating that the US economy performed well in February. The Institute of Supply Management reported an increase in the PMI to 52.4, whereas a separate report from S&P Global indicated a figure of 51.6. The data indicates that the manufacturing sector in the country is performing positively. The upcoming significant news regarding GBP/USD will originate from the United States, where the ADP and the Bureau of Labour Statistics are set to release the latest employment figures. Analysts anticipate that the forthcoming ADP report will indicate an addition of 50k jobs in the private sector for February. The BLS is set to publish its labour report on Friday, with analysts anticipating the addition of 70k jobs while the unemployment rate holds steady at 4.3%.
The daily timeframe chart indicates that the GBP/USD pair fell to 1.3310 on Monday as the US dollar’s rally persisted. The asset fell beneath the 50-day moving average, and the Relative Strength Index has declined past the neutral level of 50. The two lines of the MACD indicator have executed a bearish crossover and are currently positioned below the zero line. On the positive side, it has formed a standard doji candlestick pattern, which is a common bullish reversal sign. Consequently, the pair is expected to rebound shortly, possibly reaching the significant resistance level at 1.3600. A decline beneath this week’s low of 1.3310 will indicate further downside potential.