GBP/USD has weakened to approximately 1.3550 during the early Asian session on Tuesday. Trump indicated that Washington would take action in response to Iranian attacks on US forces. The US ISM Manufacturing PMI report is scheduled for release on Tuesday, preceding the US jobs data. The GBP/USD pair is experiencing slight declines, hovering around 1.3550 in the early hours of trading on Tuesday in the Asian market. The US Dollar edges higher against the British Pound amid ongoing Middle East tensions and Federal Reserve Chair Kevin Warsh’s hawkish remarks at the Jackson Hole symposium.
US President Donald Trump on Monday issued a threat to take decisive military action against Iran following an exchange of fire between the US and Iran, marking the first such incident in a month. Meanwhile, Iran’s Revolutionary Guard Corps announced that it had targeted US military bases in the two Middle Eastern countries as a reaction to the initial US strikes on Iran in several weeks. Late Monday, the United Kingdom Maritime Trade Operations reported that a tanker has indicated it was struck by three projectiles while navigating out of the Strait of Hormuz, according to Reuters. Rising tensions in the Middle East may enhance safe-haven flows, thereby bolstering the Greenback and presenting a challenge for the major pair. Fed Chairman cautioned on Friday that inflation is not decelerating markedly, and that unless policymakers gain assurance of such a trend, the central bank has “work to do.”
Traders are increasing their wagers on a rate hike in September in the wake of Warsh’s speech. Traders prepare for the upcoming release of the US ISM Manufacturing Purchasing Managers Index report, scheduled for later on Tuesday. On Friday, focus will turn to the employment data for August. In the event of a weaker-than-anticipated result, this may exert downward pressure on the USD in the short term. Strategists highlight that market pricing remains firmly tilted toward further BoE tightening, with investors assigning “a ~60% chance of a 25bpt at the next BoE meeting on September 16” and “a cumulative 36bpts of tightening by year-end.” They add that, in terms of sentiment, “the October 28 budget… will remain a key focus for markets over the next coupld of months,” underscoring the extent to which fiscal signals are now seen as integral to the UK policy outlook.
In the daily chart, GBP/USD is currently positioned at 1.3546. The pair exhibits a slight bullish inclination, as the price remains above the 100-day simple moving average at 1.3444 and the lower Bollinger Band at 1.3433, indicating persistent demand during pullbacks. However, spot is pressing against the Bollinger middle band at 1.3550, which acts as a nearby cap, while the Relative Strength Index at 53.3 indicates steady but not overstretched upside momentum. On the topside, initial resistance is positioned at the Bollinger 20-period SMA near 1.3550, succeeded by the upper Bollinger Band approximately at 1.3668. On the downside, support is initially found at the 100-day SMA at 1.3444, followed by the lower Bollinger Band at 1.3433, where it is anticipated that buyers will re-emerge should a corrective pullback occur.
