GBP/USD is showing resilience, approaching the 1.3360 mark during the Asian session on Tuesday. Renewed US strikes on Iran and concerns regarding shipping in the Strait of Hormuz may limit the potential gains for the pair. BoE’s Pill indicated that interest rates are expected to increase in order to maintain control over inflation. The GBP/USD pair is positioned in positive territory, hovering around 1.3360 during the Asian trading hours on Tuesday.
However, the potential upside for the major pair may be constrained due to concerns regarding an intensifying US-Iran conflict. The US June Consumer Price Index inflation report will be the focal point later on Tuesday. US President Donald Trump stated on Monday that Washington was reinstating a naval blockade on Tehran and would ensure the Strait of Hormuz remained open for a fee, following recent exchanges of missile and drone strikes, according to source.
The US military announced the completion of new strikes on Iranian military targets, noting that over 50,000 US service members are presently deployed throughout the Middle East. Meanwhile, the Iranian Islamic Revolutionary Guards Corps stated on Tuesday that collaboration with the ‘aggressor enemy’ in the Strait of Hormuz will postpone the reopening of the waterway and lead to a global energy crisis. Concerns over escalating tensions between the US and Iran could enhance the appeal of a safe-haven currency like the US Dollar and limit the potential gains for the GBP/USD pair.
Traders increased their expectations that the Bank of England will need to elevate interest rates this year to manage inflation effectively. BoE Chief Economist Huw Pill indicated that interest rates are expected to increase this year to avert the risk of inflation becoming entrenched.