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GBP/USD holds near 1.3450 as US-Iran tensions escalate

The pound is trading flat around 1.3450 while traders weigh the impact of expanding US-Iran strikes and a softer inflation outlook that has reduced Fed hike odds for July.

Reported · Written up by our desk · Major Pairs

GBP/USD was steady in early Asian trading on Monday, holding near 1.3450 as markets digested fresh developments in US-Iran tensions. FXStreet said the US reported that a third American troop was killed in the past two days, including a death tied to the controlled detonation of a downed Iranian drone and additional updates involving remains found in Jordan.

The report also noted that a week of US and Iran back-and-forth strikes has widened beyond strictly military targets to infrastructure, including bridges, utilities, and port facilities. It said that escalation could weigh on riskier assets like the British pound relative to the US dollar in the near term.

At the same time, FXStreet pointed to signs of softer US consumer and producer inflation that have dampened expectations for Federal Reserve rate hikes. According to the CME FedWatch tool cited by FXStreet, the probability of a July Fed hike was 14%, down from 25% implied odds last week, while traders priced in 30 basis points of hikes by December.

Latest closeGBP/USD 1.348 ▼0.5%

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