The British Pound weakens against the US Dollar as narrowing UK-US yield differentials and safe-haven demand bolster the greenback.
GBP/USD fell to around 1.3450 in Asian trading on Friday, extending losses for a second day. The decline comes as UK political risks ease but yield spreads between UK and US bonds narrow, reducing support for the Pound.
Analysts noted that while sentiment toward the GBP has improved following Prime Minister Burnham’s commitment to fiscal responsibility, softer yield differentials and rising oil prices pose challenges. The Bank of England faces a stagflationary dilemma, with Governor Bailey recently downplaying further rate hikes.
The US Dollar’s strength, driven by safe-haven demand, adds downward pressure on the pair. Markets remain cautious as inflation concerns persist amid geopolitical uncertainty.