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British pound slides as oil shock lifts the US dollar

GBP/USD was last at 1.3369, down more than 0.20%, as Middle East tensions boosted safe haven demand for the greenback and pushed up US yields.

Reported · Written up by our desk · Major Pairs

FXStreet reports the British pound opened the week lower after developments in the Middle East increased inflation concerns tied to higher oil prices, pressuring GBP/USD.

The outlet says escalating US and Iran attacks also triggered a flight to safe haven assets, helping lift the US Dollar Index to 101.14, up 0.18%.

FXStreet adds that US Treasury yields rose alongside energy prices, which it said can raise the odds of higher US interest rates. Traders, according to Prime Terminal data, had fully priced in a 33 basis point rate increase toward the end of the year.

Looking ahead, FXStreet notes traders are waiting for US CPI data for June on July 14, with economists estimating headline CPI would fall 0.1% month over month and core CPI would be flat at 0.2% month over month. The report also flags uncertainty around incoming UK Prime Minister Andy Burnham’s cabinet as a potential headwind for sterling.

Latest closeGBP/USD 1.335 ▼0.5%|Dollar index 101.28 ▲0.3%

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