The British Pound (GBP) has come under significant pressure against the US Dollar (USD), with GBP/USD falling sharply to a low of 1.3527 and closing at 1.3540, defying earlier expectations for range-bound trading. United Overseas Bank (UOB) analysts Quek Ser Leang and Lee Sue Ann note that the pair remains deeply oversold, suggesting limited further losses in the immediate term within a 1.3520–1.3570 range, but the risk remains skewed to the downside with 1.3480 as the next level to watch if GBP/USD stays capped below 1.3600 [1].
Market sentiment has been negatively impacted by heightened geopolitical tensions, specifically fresh hostilities between the US and Iran. Reports indicate that the US launched an attack on missile launchers on Larak Island, prompting retaliatory actions from Tehran, including attacks on US military sites in Jordan and threats of further response from the Islamic Revolutionary Guard Corps (IRGC) [2]. This risk aversion has kept the Greenback supported and limited any recovery in the Pound, with GBP/USD holding near two-week lows [2].
Additionally, expectations of US Federal Reserve tightening have bolstered the USD. Fed Chairman Kevin Warsh, speaking at the Jackson Hole Summit, hinted at potential rate hikes if inflation remains elevated, reaffirming the Fed's commitment to its 2% PCE inflation target. OCBC strategists highlight that these comments have strengthened the USD, pressured gold, and flattened the US yield curve. They also suggest that USD dips may remain limited unless softer US data emerges, with market focus now turning to upcoming US labor and inflation data ahead of the September FOMC meeting [2].
The UK economic calendar is relatively light, and attention is shifting to the G20 finance ministers' meeting in North Carolina, where US Treasury Secretary Scott Bessent is expected to address concerns about US debt and urge China to cut ties with Iran [2].
CONCLUSION
The British Pound remains under pressure near two-week lows against the US Dollar, weighed down by escalating geopolitical tensions and renewed expectations of US Federal Reserve rate hikes. With downside risks persisting and limited immediate catalysts from the UK, market participants are closely watching upcoming US economic data and global political developments for further direction.