Recent developments in the Middle East and shifting central bank policy expectations have driven notable moves in major currency pairs. The GBP/USD pair slipped by 0.17% on Thursday, trading at 1.3534 after reaching a two-month high of 1.3594 earlier in the day. This decline followed stronger-than-expected US Initial Jobless Claims, which fell from 218K to 207K for the week ending April 11, beating forecasts of 215K. Despite this, US industrial production slowed, dropping from 0.7% to -0.5% month-over-month in March, with motor vehicles, parts, and utilities seeing the largest declines. Federal Reserve officials maintained a cautious stance, with NY Fed's John Williams highlighting inflation risks from the Iran conflict and Governor Stephen Miran expecting three rate cuts instead of four due to 'less favorable' inflation developments [1].
In the UK, GDP rose by 0.5% month-over-month in February, surpassing the estimated 0.1% expansion. However, the Pound's strength has been undermined by the UK's status as a net energy importer and the impact of Middle East tensions, which led to a 1.9% fall in March. Hopes for a peace deal in the region, including the reopening of the Strait of Hormuz, have recently supported a rebound in GBP/USD. Additionally, expectations for two Bank of England rate hikes in 2026 are rising [1].
On the geopolitical front, both articles report that US President Donald Trump announced a ceasefire agreement between Israel and Lebanon, set to begin on Thursday at 5:00 PM EDT, according to Qatari Al-Araby TV reports. A Pakistani mediator was also reported to be in Tehran, and the White House expressed optimism about reopening the Strait of Hormuz [1][2].
The USD/JPY pair also saw gains, trading near 159.20 after surging roughly 100 pips from its intraday low. The US Dollar benefited from safe-haven demand amid ongoing Middle East uncertainties and the strategic importance of the Strait of Hormuz. The Japanese Yen struggled to gain traction as the Bank of Japan continued its gradual normalization approach, emphasizing data dependence and the need for sustainable inflation. Technical analysis showed USD/JPY consolidating just below the 100-period SMA at 159.29, with mild positive momentum indicated by an RSI of 53 [2].
CONCLUSION
The US Dollar has strengthened against both the Pound and the Yen, supported by robust US jobs data, safe-haven flows amid Middle East tensions, and diverging central bank policies. While hopes for a ceasefire and reopening of the Strait of Hormuz have improved market sentiment, the underlying economic and policy divergences continue to drive currency movements. Investors remain attentive to further geopolitical developments and central bank signals.