Geopolitical risks and softer US inflation expectations limit Fed rate hike bets, capping USD gains against GBP.
The GBP/USD pair remains steady around 1.3450 in early Asian trading as investors monitor escalating US-Iran tensions. A third American troop death in Iraq and expanded strikes on infrastructure raise concerns over prolonged Middle East conflict, potentially pressuring risk assets like the British Pound.
Recent US inflation data has reduced expectations for Federal Reserve rate hikes, with July hike odds falling to 14% from 25% last week. Traders now price in 30 basis points of tightening by December, according to the CME FedWatch tool. The UK employment report due Tuesday may influence GBP movement.
While geopolitical risks could weigh on GBP, softer Fed policy expectations may limit USD upside in the near term.