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GBP/USD holds losses as US-Iran hopes ease risk aversion

Money markets still price a 25-basis-point Bank of England hike by year end, despite the central bank holding rates last week.

Reported · Written up by our desk · Major Pairs

GBP/USD is holding losses after three straight days of gains, trading around 1.3470 during Monday’s Asian session, as easing risk aversion weighs on the US dollar, FXStreet reports.

The backdrop is reports that US President Donald Trump held off on planned strikes after Iran and other Middle Eastern nations requested additional time to finalize an agreement that would reopen the Strait of Hormuz and eliminate Iran’s nuclear threat, though Iranian officials quickly dismissed the claims and said armed forces remain on high alert.

In the UK, the Bank of England kept interest rates unchanged last week but left open the possibility of rate hikes amid ongoing uncertainty tied to the US-Iran situation. Prime Terminal data shows money markets continue to price a 25-basis-point increase by the end of the year.

Scotiabank described the BoE decision as “softened hawkishness,” pointing to Governor Andrew Bailey playing down the urgency around the timing of the next hike, even as the Monetary Policy Committee voted 6-3 to hold rates, with three policymakers calling for a 25-basis-point increase.

Latest closeGBP/USD 1.349 ▲0.9%

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