The Pound US Dollar (GBP/USD) exchange rate remained firmly on the defensive on Tuesday, sliding to a fresh three-month low as the Iran conflict rumbled on.
Pound to Dollar (GBP/USD): 1.33125 (-0.72%)
Euro to Dollar (EUR/USD): 1.1603 (-0.79%)
Dollar to Japanese Yen (USD/JPY): 157.7395 (+0.3%)
DAILY RECAP:
The US Dollar (USD) continued to climb on Tuesday, extending its recent gains as geopolitical risk premiums linked to the ongoing conflict in Iran reinforced demand for safe-haven assets.
US President Donald Trump has warned that the US potentially faces a prolonged war, with US forces committed until it has achieved all its goals in Iran.
In addition to the US Dollar benefiting from the resulting flight to safety, its upside is reinforced by the surge in energy prices.
As other major currencies such as the Pound and Euro have been hit by the spike in imported energy costs since the start of the conflict, America’s structural energy independence is seen as a major boon for the US Dollar.
While it fell sharply against the US Dollar, the Pound (GBP) was mostly subdued against its other peers on Tuesday after Chancellor Rachel Reeves delivered her Spring Statement.
While Reeves’s statement didn’t include any policy changes, she did respond to the latest forecasts from the Office for Budget Responsibility (OBR), which now predicts weaker growth in 2026.
However, the impact of these forecasts was limited, with analysts deeming much of it, particularly regarding inflation, already out of date due to the Iran war and the subsequent surge in energy prices.
Near-Term GBP/USD Forecast: ISM Services in Focus
Looking ahead, the Pound to US Dollar exchange rate will likely remain on the back foot through the middle of the week as movement in the currency market remains closely linked to developments in the Middle East.
Also of note to USD investors will be the publication of the latest ISM services PMI, which may accelerate the appreciation of the US Dollar if the index holds near its recent highs in February.
In the meantime, rising gas prices are likely to remain a concern for GBP investors, although the Pound may enjoy a temporary reprieve with the release of the UK’s own services PMI if February’s finalised figures confirm another robust expansion in the sector.
