Rising geopolitical risks in the Middle East bolster the USD, offsetting hawkish Bank of England signals and capping GBP gains.
GBP/USD traded steady around 1.3470 in Asian hours Wednesday, halting a four-day rally as heightened Middle East tensions fueled demand for the USD. Iran’s missile strikes toward Kuwait and Bahrain, intercepted by US forces, raised concerns over potential disruptions in global energy supplies, particularly via the Strait of Hormuz.
The US Dollar strengthened on safe-haven flows, supported by strong economic data. The ISM Manufacturing PMI rose to 54 in May 2026, exceeding forecasts and marking the strongest expansion since May 2022. April JOLTS data showed job openings surging to 7.6118 million, a near two-year high, reinforcing expectations of prolonged Fed rate hikes.
Investors await Friday’s Nonfarm Payrolls report for further clues on US monetary policy, as resilient labor and manufacturing data complicate the inflation outlook.