Investing.com — Sterling weakened on Tuesday, hovering near $1.3234 by 0350 ET, as the dollar stayed firm ahead of a White House deadline tied to the U.S.-Iran conflict.
The move extended recent losses, with GBP/USD touching an intraday low of $1.3211. The pair’s 52-week trough stands at $1.2721.
The dollar drew support from geopolitical uncertainty, with investors awaiting clarity on whether a ceasefire can be reached. Failure to secure an agreement could trigger U.S. and Israeli military action against Iranian civilian infrastructure, raising the risk of retaliatory strikes across the Gulf.
Elevated energy prices remain a key channel supporting the greenback. Further gains in oil and gas, should tensions escalate, would be “unambiguously dollar-positive,” ING strategist Chris Turner said.
Domestic data has also underpinned the U.S. currency. Friday’s March jobs report surprised to the upside, while markets currently price the Federal Reserve’s policy path as largely flat this year, in contrast to expectations for two to three rate hikes among major peers.
Stronger activity data and rising energy costs could prompt a shift toward pricing Fed tightening, ING said. Investors will look to Wednesday’s minutes from the March 18 Federal Open Market Committee meeting and Friday’s March CPI data for direction.
Headline U.S. inflation is expected to rise to 3.4% year-on-year from 2.4%. Comments from New York Fed President John Williams, typically seen as dovish, will also be monitored for any shift in tone.
ING expects the dollar index (DXY) to remain supported in a 100-100.50 range.
Elsewhere, the euro remained under pressure, with EUR/USD at $1.1544 and confined within a 1.1420-1.1640 range. Markets have pared back expectations of an April rate hike by the European Central Bank to just under 50%, though around 75 basis points of tightening is still priced for the year.
ING warned that if the ECB skips an April move despite high energy prices, the euro could weaken further.
In Central and Eastern Europe, markets tracked global developments. Czech inflation is expected to rise in March on higher fuel costs, while Romania’s central bank is seen holding rates at 6.50% despite double-digit inflation. Poland’s central bank is also expected to stand pat at 3.75%, with guidance later in the week in focus.
In Asia-Pacific, the Reserve Bank of New Zealand is widely expected to keep rates unchanged at 2.25% on Wednesday.
The New Zealand dollar has lagged the Australian dollar this year, and absent a hawkish surprise, that trend may persist.
