The British Pound (GBP) edged higher against the US Dollar (USD) during the North American session on Monday, rising 0.09% to trade at 1.3549, as the USD softened ahead of key US jobs data releases and despite hawkish remarks from Federal Reserve Chair Kevin Warsh last Friday [1]. The GBP/USD pair maintained a bullish near-term bias, holding above key technical levels, with immediate support at 1.3550 and resistance near 1.3482 and 1.3385 [1].
Geopolitical tensions escalated as American forces struck Iranian launchers on Larak Island, prompting Iran to retaliate with missile and drone attacks on US assets in Jordan and the UAE [1][3]. President Donald Trump stated that US retaliation is forthcoming, according to FoxNews [1]. These developments drove energy prices higher, with West Texas Intermediate (WTI) crude oil reaching $85.56 per barrel, up 2.50% after a session high of $86.79 [1][3]. Shipping data indicated that visible commodity vessels crossing the Strait of Hormuz fell to roughly five a day over the weekend, and British maritime authorities reported a tanker struck by a projectile on Saturday [3]. Despite these risks, no barrels were removed from the market, and Gulf exports improved to 15-16 million barrels a day, up from the March trough of 5-6 million but still below prewar levels of 22-24 million [3].
The US Dollar Index (DXY) traded just beneath 99.50, down 0.26% on Monday, despite rising yields and a 60% market-implied probability of a Fed rate hike in September, up from 35% before Friday [2]. However, global repricing of rate expectations saw borrowing costs rise in the euro area and Japan, with the European Central Bank and Bank of Japan now carrying firmer expectations of September rate increases than the Fed [2]. The ECB meets September 9-10 and is widely expected to raise rates, while pricing for a Bank of Japan increase on September 18 runs near 84% [2].
In the UK, domestic developments such as new PM Andy Burnham's Autumn Budget and the upcoming Bank of England Monetary Policy Hearings, along with Governor Andrew Bailey's speech on Thursday, are expected to influence GBP/USD direction [1]. Meanwhile, US economic releases this week include ISM Manufacturing PMI for August, expected to decelerate from 55.6 to 55.2, and JOLTS Job Openings for July, which will provide further insight into labor market strength [1].
The mechanism behind oil price movements is seen as a risk premium due to transit risks in the Strait of Hormuz rather than actual supply loss, with administrative sanctions by the US Treasury expected to have a longer-term impact on oil flows [3].
CONCLUSION
The GBP/USD pair rose modestly as the USD softened amid heightened geopolitical tensions and surging oil prices, with markets closely watching upcoming US jobs and inflation data. Despite increased risk premiums in oil, no significant supply disruptions have occurred, and global rate expectations are shifting, impacting currency dynamics. The market remains sensitive to further geopolitical developments and central bank policy signals.