The Pound US Dollar (GBP/USD) exchange rate touched a two-week low on Monday as escalating tensions in the Middle East fuelled risk aversion.
Pound to Dollar (GBP/USD): 1.31923 (-0.35%)
Euro to Dollar (EUR/USD): 1.14545 (-0.33%)
Dollar to Japanese Yen (USD/JPY): 159.4775 (-0.47%)
DAILY RECAP:
The US Dollar (USD) remained strong at the start of this week’s session, as ongoing risk aversion amid the crisis in the Middle East provided the currency with safe-haven flows.
The anxious mood came after Yemen’s Houthis – close allies of Iran’s – entered the conflict over the weekend. This escalation risks widening the scale of the war and deepening the damage done to the global economy.
Meanwhile, fresh comments from President Donald Trump prompted some mixed movement, but ultimately added to the geopolitical uncertainty.
Although Trump claimed that Iran was allowing 20 oil tankers to pass through the Strait of Hormuz as a ‘present’ and that the two sides were having ‘serious discussions’, he also reiterated his threat to destroy Iranian energy infrastructure if the strait is not immediately opened.
Worries that the conflict could continue to spiral and cause huge harm to the global economy rattled markets, thereby boosting the US Dollar.
Meanwhile, the increasingly risk-sensitive Pound (GBP) struggled amid this risk-off market mood.
In addition, a lack of British economic data left the currency defenceless, with no impactful UK releases to influence GBP movement.
Near-Term GBP/USD Forecast: UK GDP
Looking forward, the UK’s final GDP figures for the fourth quarter of 2025 could influence the Pound on Tuesday. Confirmation that growth remained weak at just 0.1% could weigh on GBP, while any deviation from the preliminary result could drive steeper movement.
As for the US Dollar, February’s Job Openings and Labor Turnover Survey (JOLTS) could pressure USD, if it reveals that the number of job vacancies declined last month.
An expected drop in US consumer confidence in March could also weigh on the ‘Greenback’ on Tuesday, with rising prices amid the war on Iran potentially weighing on household morale.
Meanwhile, any developments in the Middle East conflict could impact the GBP/USD exchange rate. If markets remain anxious about further escalations, the safe-haven US Dollar could climb against the Pound.
