GBP/USD falls to around 1.3530 on Tuesday at the time of writing, down 0.59% on the day, as renewed risk aversion supports the US Dollar (USD) against the British Pound (GBP).
Market sentiment deteriorates following fresh geopolitical tensions in the Middle East
According to a CNN report published late Monday, US President Donald Trump has grown increasingly frustrated with how Iran is handling talks aimed at ending the conflict, while some members of his administration are now reportedly considering a resumption of major military operations more seriously. This backdrop boosts demand for the US Dollar (USD), traditionally viewed as a safe-haven asset. The US Dollar Index (DXY), which tracks the Greenback’s value against a basket of six major currencies, rises 0.35% to around 98.30.
Investors also remain cautious ahead of the release of the United States (US) Consumer Price Index (CPI) for April at 12:30 GMT. Consensus expects annual headline inflation to accelerate to 3.7% from 3.3% in March, while core inflation is projected at 2.7% versus 2.6% previously. A stronger-than-expected inflation reading could reinforce expectations that the Federal Reserve (Fed) will keep monetary policy restrictive for longer, further supporting the US Dollar.