Select Language

GBP/USD pauses after sell-off on Middle East crisis inspired USD haven demand

Breaking news

GBP/USD pauses after sell-off on Middle East crisis inspired USD haven demand

  • X
  • facebook
  • LINE
  • RSS

  • X
  • facebook
  • LINE
  • RSS
New update 2024.10.02 21:09
GBP/USD pauses after sell-off on Middle East crisis inspired USD haven demand

update 2024.10.02 21:09

  • GBP/USD stalls after Tuesday's drop which was caused by a surge in safe-haven demand for the US Dollar 
  • Iran stoked Middle Eastern tensions with a mass missile strike on Tel Aviv. 
  • Continued diverging outlook on monetary policy may put a floor under GBP/USD's losses.

GBP/USD stalls and seesaws between tepid gains and losses in the 1.3280s on Wednesday after falling a whole cent on the previous day, when the US Dollar (USD) strengthened as a result of a rise in safe-haven flows due to an escalation of the conflict in the Middle East. 

Despite recent losses, the GBP/USD is in an overall uptrend, which has seen it gain almost 5.0% from the early August lows. 

Night skies were set alight on Tuesday evening after Iran fired around 200 missiles, many of which were ballistic at the Israeli capital Tel Aviv, in retaliation for the killing of the Hezbollah leader Hassan Nasrallah.The situation remains tense after Israeli Prime Minister Benjamin Netanyahu vowed Israel would avenge the attack, and that Iran had "made a big mistake". 

The New York Times also reported that Israel is committing more troops to its bloody ground offensive in Lebanon, and with tensions running high, the Dollar is likely to see continued support from investors seeking safety. This, in turn, is likely to cap any gains for GBP/USD. 

The pair had been in a steady uptrend since early August because of the divergent outlook for monetary policy in the UK and the US. In the UK, the Bank of England (BoE) decided to leave interest rates unchanged at its policy meeting in September whilst in the US the Federal Reserve (Fed) slashed interest rates by a double-dose 50 bps at its meeting. Lower interest rates are generally negative for a currency - in this case the Dollar - as they reduce capital inflows.

The BoE has been advocating a cautious, "steady-as-she-goes" approach to reducing interest rates amid still-high services sector inflation and relatively robust growth. In the US, conversely  fears about a hard-landing and weak labor market briefly caused market-based bets to soar to 60% that the Fed would follow up with another 50 bps cut at their November meeting. 

Although these bets have since eased after US data reassured investors about the state of the economy, investors remain tense as they await a key piece of data regarding the labor market, in the form of US NonFarm Payrolls data for September, out on Friday. 


Date

Created

 : 2024.10.02

Update

Last updated

 : 2024.10.02

Related articles


Show more

FXStreet

Financial media

arrow
FXStreet

FXStreet is a forex information website, delivering market analysis and news articles 24/7.
It features a number of articles contributed by well-known analysts, in addition to the ones by its editorial team.
Founded in 2000 by Francesc Riverola, a Spanish economist, it has grown to become a world-renowned information website.

Was this article helpful?

We hope you find this article useful. Any comments or suggestions will be greatly appreciated.  
We are also looking for writers with extensive experience in forex and crypto to join us.

please contact us at [email protected].

Thank you for your feedback.
Thank you for your feedback.

Most viewed

AUD/USD ascends on mixed US data, ends week with losses

The Australian Dollar recovered some ground against the Greenback on Friday after a measure of prices paid by producers reaffirmed that inflation is coming down, warranting further easing by the Federal Reserve.
New
update2024.10.12 07:28

USD/JPY Price Forecast: Consolidates within the 148.00-149.50 range

The USD/JPY edged higher during the North American session as US Treasury yields remained higher, particularly the 10-year T-note, which was up close to four basis points at 4.104%.
New
update2024.10.12 06:13

Canadian Dollar sheds weight for eighth straight day

The Canadian Dollar (CAD) fell against the Greenback for an eighth consecutive trading day as markets pivot out of the Loonie in favor of the US Dollar.
New
update2024.10.12 05:51

Gold surges on mixed US data, increased Fed rate cut speculation

Gold rallied over 1% on Friday, with the yellow metal set to end the week with modest gains of 0.20% after inflation data revealed on Friday and the Consumer Price Index (CPI) report on Thursday capped the Greenback's advance.
New
update2024.10.12 05:09

Mexican Peso rallies as Fed rate cut bets weaken the US Dollar

The Mexican Peso registers gains against the Greenback for the second consecutive day after hitting a low of 19.61 in early trading on Thursday.
New
update2024.10.12 03:09

Dow Jones Industrial Average hits fresh record high after slack PPI print

The Dow Jones Industrial Average (DJIA) rose over 400 points bottom-to-top on Friday, bolstered into a fresh record high of 42,837 after US Producer Price Index (PPI) inflation figures cooled in September.
New
update2024.10.12 02:38

US: The outlook is improving, but some risks remain - National Bank of Canada

Recent weeks have been punctuated by a number of positive developments for the U.S.
update2024.10.12 00:59

Mid-east conflict and OPEC+ restraint hopes preventing a sharp oil correction - TDS

Notwithstanding concerns surrounding a wider Middle East war, which could disrupt oil flows from the region, China stimulus disappointment and OPEC+ producer plans to bring barrels back in the coming months have put the crude oil market at risk of a sharp correction.
update2024.10.12 00:21

EUR/GBP slides lower as analysts bet on ECB easing, UK data beats expectations

EUR/GBP edges lower on Friday as traders sell the Euro (EUR) due to the increasing likelihood of the European Central Bank (ECB) making more aggressive interest rate cuts in the future.
update2024.10.11 23:55

GBP/USD Price Forecast: Bounces from weekly lows as 'hammer' hints reversal

The Pound Sterling recovers some ground against the greenback as a 'hammer' emerges on the daily chart and rises above 1.3050, registering gains of over 0.15%.
update2024.10.11 23:39

Disclaimer:arw

All information and content provided on this website is provided for informational purposes only and is not intended to solicit any investment. Although all efforts are made in order to ensure that the information is correct, no guarantee is provided for the accuracy of any content on this website. Any decision made shall be the responsibility of the investor and Myforex does not take any responsibility whatsoever regarding the use of any information provided herein.

The content provided on this website belongs to Myforex and, where stated, the relevant licensors. All rights are reserved by Myforex and the relevant licensors, and no content of this website, whether in full or in part, shall be copied or displayed elsewhere without the explicit written permission of the relevant copyright holder. If you wish to use any part of the content provided on this website, please ensure that you contact Myforex.

  • Facebook
  • Twitter
  • LINE

Myforex uses cookies to improve the convenience and functionality of this website. This website may include cookies not only by us but also by third parties (advertisers, log analysts, etc.) for the purpose of tracking the activities of users. Cookie policy

I agree
share
Share
Cancel