Easing Middle East tensions and lower oil prices reduce inflation concerns, prompting traders to scale back Fed tightening expectations.
The GBP/USD pair extended gains for a second session, trading modestly higher near 1.3450 in early European trading on Wednesday. The move reflects reduced bets on an imminent Fed rate hike after crude oil prices fell to a four-week low, easing inflation pressures.
Optimism over diplomatic progress in the Middle East and the reopening of the Strait of Hormuz weighed on oil markets, undermining the safe-haven USD. However, caution prevails ahead of Friday’s US Nonfarm Payrolls report, which could clarify the Fed’s policy trajectory and influence near-term USD dynamics.
Technical indicators remain supportive, with the pair holding above its 200-hour SMA and momentum signals mildly positive. The RSI stands near 55, while the MACD hovers just above zero, suggesting sustained bullish pressure.