Geopolitical risks in the Strait of Hormuz support the USD, capping gains in the GBP/USD pair despite softer Fed rate hike bets.
The GBP/USD pair remains range-bound near 1.3350 in early Asian trading, failing to extend last week’s rally. Spot prices stay below the 200-day Simple Moving Average, signaling caution among traders.
Renewed tensions in the Strait of Hormuz, after Iran announced plans to impose fees on passing ships, bolstered the USD’s safe-haven appeal. The US rejected Iran’s proposal, but geopolitical risks persist, limiting downside for the Greenback.
Traders have scaled back expectations for Federal Reserve rate hikes following weaker US jobs data and easing inflation concerns. Markets now price in fewer rate increases in 2026, restraining aggressive USD buying.