Sterling falls against the dollar after Trump imposes a 20% transit fee on Hormuz shipping and a Fed official signals potential rate hikes.
GBP/USD dropped to 1.3349 on Monday, retreating from its 200-day EMA near 1.3400 as broad USD demand weighed on the pair. The decline followed two key developments: a 20% transit fee imposed by the U.S. on ships passing through the Strait of Hormuz and hawkish remarks from a Federal Reserve official who previously advocated rate cuts.
The Hormuz fee, announced by President Trump, reverses his earlier stance against tolling the critical oil chokepoint. The move follows renewed U.S.-Iran tensions and last month’s collapsed ceasefire. Meanwhile, the Fed official’s shift from dovish to hawkish rhetoric added to USD strength, pressuring risk-sensitive currencies like the pound.
Markets reacted by selling GBP/USD, with the pair testing support at 1.3350. The dollar’s rally extended across major currencies, reflecting heightened geopolitical and monetary policy risks.