The US Dollar strengthened against major currencies as geopolitical tensions in the Middle East escalated, reviving the risk premium and driving safe-haven flows into the Greenback. The British Pound fell by 0.48% against the US Dollar, with GBP/USD trading at 1.3371 after reaching a daily high of 1.3455, as risk appetite deteriorated and the US Dollar Index (DXY) advanced 0.14% to 101.14 [1]. The escalation was fueled by reports of Washington demanding a longer ceasefire and partial navigation through the Strait of Hormuz, while Iran proposed a 10-day ceasefire. Axios reported that former President Trump is considering either promoting a 10-day ceasefire or launching a full-scale war on Iran, with a US official stating that expanded strikes could target Tehran and nuclear sites [1].
US Treasury yields rose, with the 10-year note up three basis points at 4.624%, supporting the US Dollar. Market expectations, according to Prime Terminal, indicate a 78% probability that the Federal Reserve will keep rates unchanged at the upcoming meeting, but the odds for a rate hike in September are near 68% [1]. In the UK, John Healey was appointed as Chancellor of the Exchequer by new Prime Minister Andy Burnham, succeeding Rachel Reeves. Despite Burnham's commitment to fiscal rules, uncertainty about the UK's fiscal position contributed to the Pound's weakness [1].
The Swiss Franc also weakened against the US Dollar, with USD/CHF trading around 0.8123, up 0.27% on the day, as buyers eyed a breakout above the 0.8150 resistance level that has capped gains since July 2025 [2]. The pair has maintained a near-term bullish bias above 0.8000, though technical indicators suggest the recent advance may be losing strength, with the Average Directional Index (ADX) easing to around 26 from above 30 [2]. The Relative Strength Index (RSI) near 59 indicates positive momentum without overbought conditions [2].
A heat map of currency movements showed that the Swiss Franc was the strongest against the British Pound, while the Pound was notably weak across major currencies, declining 0.43% against the US Dollar and 0.39% against the Euro [2]. Market participants are closely watching upcoming US Initial Jobless Claims and UK inflation data for further direction [1].
CONCLUSION
Geopolitical tensions in the Middle East have driven safe-haven flows into the US Dollar, resulting in notable declines for both the British Pound and Swiss Franc. Market uncertainty around UK fiscal policy and expectations for US monetary policy are adding to currency volatility. Investors remain focused on upcoming economic data and developments in the Middle East for further market direction.