Geopolitical risks and upcoming US CPI data weigh on the pair, keeping the pound near a three-week low against the dollar.
The GBP/USD pair remains subdued near 1.3365-1.3370 in early Asian trading, failing to extend recent recovery gains. Fresh US military strikes against Iran and Tehran’s retaliatory warnings have bolstered the USD’s safe-haven appeal, capping the pair’s upside.
Traders are also awaiting the US Consumer Price Index (CPI) report, which will shape expectations for Federal Reserve policy. Markets are pricing in potential rate hikes by year-end amid concerns over energy-driven inflation. The pair had earlier hit a three-week low but lacks momentum ahead of key data.
The USD’s strength reflects cautious sentiment, though some hesitation persists before the CPI release. Iran’s vow to respond to any threats further clouds the outlook, keeping risk assets under pressure.