The British Pound (GBP) extended its losses against the US Dollar (USD) for the fourth consecutive day, with the GBP/USD pair poised to end the week down more than 2%. At the time of reporting, GBP/USD traded at 1.3343, its lowest level since April 8, as political instability in the UK and heightened geopolitical risks related to Iran drove risk aversion in global markets [1].
Political turmoil in the UK intensified as Prime Minister Keir Starmer faced mounting pressure following the resignation of his health minister, Wes Streeting. Additional uncertainty arose as Greater Manchester Mayor Andy Burnham was reportedly offered a path to a possible leadership challenge, after another Labour lawmaker announced plans to resign his parliamentary seat [1]. This political uncertainty, coupled with speculation that Starmer’s successor could widen fiscal deficits, weighed heavily on the Pound [1].
On the international front, US President Donald Trump’s comments expressing impatience with Iran contributed to a surge in oil prices, with West Texas Intermediate (WTI) crude rising more than 2.39%. The US Dollar Index (DXY) also climbed to 99.29, up 0.39% on the day, reflecting a flight to safety and the Greenback’s positive correlation with oil prices [1]. The Iran conflict has underpinned energy prices, leading to higher global bond yields amid speculation that major central banks, including the Federal Reserve, may tighten monetary policy. Prime Terminal data indicated that the probability of a Federal Reserve rate hike by year-end 2026 now stands at 50% [1].
US economic data showed improvement, with Industrial Production rising 0.7% month-over-month in April, surpassing estimates of 0.3% and rebounding from March’s -0.3% contraction [1]. In contrast, the UK faces a busy economic calendar next week, including jobs, inflation, flash PMIs, and Retail Sales data, as well as speeches from Bank of England members [1].
A table of weekly currency performance showed the British Pound was the weakest against the US Dollar, down 1.77% for the week, and also declined against other major currencies [1].
CONCLUSION
The British Pound experienced significant losses this week, driven by UK political instability and escalating geopolitical tensions involving Iran. Market sentiment remains risk-averse, with investors favoring the US Dollar and energy prices rising. Upcoming UK economic data and central bank commentary will be closely watched for further direction.