The British pound is strengthening to near 1.3400 as political risk in the UK declines
The GBP/USD pair strengthened near 1.3395 during Thursday trading hours in Asia, boosted by decreasing political uncertainty in the country. However, hawkish protocols from the Federal Reserve (Fed) and renewed tensions between the US and Iran could support the US dollar (USD) and limit the main pair’s rally.
Following Keir Starmer’s resignation at the end of June, political risk in the UK decreased significantly with the abolition of Cable. The formal race to replace outgoing Prime Minister Keir Starmer begins on July 9. Front-runner Andy Burnham is widely expected to take over as prime minister by July 20. Read more…
British Pound Sterling wins the day and remains in the same trap
On Wednesday, GBP/USD is trading just below 1.3400, up about a quarter of a percent, and once again resting on the 200-day exponential moving average (EMA), which has held off any gains since the pair rebounded from declines in mid-June. Cable has recovered roughly two gigantic numbers from the 1.3150 area in less than two weeks, and the reward for that effort is a ceiling it can’t break and a floor it refuses to leave.
The pound’s offer is not unique: fresh American attacks on Iran caused the price of oil to boost by over 6% and resulted in a tightening of the expectations of the Bank of England (BoE). Markets are now fully pricing in a 25-basis-point hike by the end of the year, compared with about a three-quarters chance before President Trump announces the end of the Versailles ceasefire, and November’s move is better than equal. June’s hold at 3.75% has already seen two dissidents vote for 4.00%, so the hawkish bloc only needs an energy shock to sustain itself, and the Strait of Hormuz is providing persistence every day. Read more…
