British Pound holds steady near 1.3450 amid US-Iran deal uncertainty
The GBP/USD pair trades on a flat note near 1.3450 during the early Asian trading hours on Monday. The British Pound (GBP) stabilizes in a sideways consolidation mode following a highly volatile week. Traders will closely monitor the developments surrounding the US-Iran peace deal and the US ISM Manufacturing Purchasing Managers Index (PMI) report later in the day.
The BBC reported on Sunday that US President Donald Trump has sought to change several terms of a proposal to end the US-Israel war on Iran. The changes are related to the Strait of Hormuz and the removal of highly enriched uranium.
Meanwhile, Iranian Foreign Minister Abbas Araghchi said that talks and message exchanges with Washington were ongoing but stressed that no assessment of negotiations could be made until a clear outcome was reached. The lack of progress in the US-Iran agreements could lift a safe-haven currency such as the US Dollar (USD) and create a headwind for the major pair in the near term.
Former Federal Reserve (Fed) Chair Jerome Powell said the US central bank would damage public trust that’s required to support a strong and stable economy if any president were free to dismiss Fed officials over policy disagreements, per Bloomberg. His comments came as the US's highest court is deliberating the fate of Fed Governor Lisa Cook, whom US President Donald Trump has sought to fire over unproven mortgage fraud allegations.
Markets have scaled back expectations for a rate hike from the Bank of England (BoE) following softer inflation data, an unexpected rise in the Unemployment Rate to 5.0% for April, and easing political concerns. BoE governor Andrew Bailey said on Friday that the UK central bank is in no rush to raise interest rates while the outcome of the Iran war remains uncertain and the UK’s growth rate stays weak.
“We have to monitor the situation in the Middle East and how it affects the UK economy and inflation very closely and adjust policy as required,” said Bailey.
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