The British Pound gains against the US Dollar amid softer USD demand and reduced UK political uncertainty before a new Prime Minister takes office.
The GBP/USD pair climbed to 1.3465, recovering 30 pips from Monday’s Asian session low, as the US Dollar faced modest downward pressure. The move snapped a two-day losing streak for the Pound but remained below a two-month high reached last week.
The USD’s decline was limited by escalating US-Iran tensions and renewed expectations of a hawkish Federal Reserve. Geopolitical risks, including US strikes in the Middle East and Iranian retaliatory attacks, supported the safe-haven Dollar. Rising oil prices also fueled inflation concerns, reinforcing bets on a potential Fed rate hike in 2026.
Despite these headwinds, the GBP found support from receding UK political risks and optimism over the country’s fiscal outlook. A new Prime Minister is set to take office, further stabilizing sentiment around the currency.