Iran tensions fuel USD demand, driving British Pound retreat from 1.34

GBP/USD slips 0.16% to 1.3372 amid mounting geopolitical tensions.
US labour market resilience is underscored by a decline in jobless claims to 194K.
With UK economic releases due, expectations of a November BoE rate hike hold steady.

The Pound Sterling is under pressure against the US Dollar, trading 0.16% lower after touching 1.3419, as heightened Middle East tensions and robust US labour market data weigh on sentiment. The jobs figures strengthen the possibility of a Federal Reserve rate increase, though not in October. GBP/USD is trading at 1.3372.

TMGM Analysis: Financial Market News, Economic Calendar & Market Insights

Why are geopolitical risks and strong US jobs data outweighing BoE hike expectations for Sterling?

Sterling and most other G7 currencies are facing pressure from the intensifying US-Iran conflict. Iran’s IRGC Navy warned that US bases would be targeted if the US encourages vessels to pass through the Strait of Hormuz. Adding to investor concerns over a more prolonged conflict were reports that the US and Israel are planning a further round of strikes after the US midterm elections.

The developments lifted crude prices, taking West Texas Intermediate (WTI) up 0.69% to $98.29 per barrel. Meanwhile, a sharp decline in US Treasury yields reflects traders moving away from stocks and seeking safety in US Treasuries.

At 194K, US Initial Jobless Claims for the week ending 24 October came in below the 200K forecast and the previous 199K reading, marking a near 57-year low. The 4-week average also eased to 197.75K, pointing to limited layoffs.

An October rate increase by the Federal Reserve is effectively off the table, with the probability at 8%. December, however, carries a near 80% chance of a hike, according to Prime Terminal.

Higher-than-expected inflation figures released during the week have strengthened the likelihood of a Bank of England rate hike at its 5 November meeting. Traders now await UK Retail Sales and the S&P Global Flash PMIs, which could add weight to the case for an increase.

Also in focus is UK Finance Minister John Healey, who is expected to present his first budget on 28 October. Major investors anticipate that the budget will pass without causing undue market disruption.

GBP/USD Price Forecast: Can the pair clear nearby technical resistance?

Chart Analysis GBP/USD — GBP/USD on the daily chart

Trading at 1.3379 on the daily chart, GBP/USD remains constrained below the key cluster of simple moving averages around 1.3407 and the nearby downward trend-line break at 1.3403. Yet the Relative Strength Index (14), near 56, points to strengthening upward momentum despite this structural pressure. Any further recovery would therefore first need to test the narrow resistance zone above.

The descending trend line provides immediate resistance at 1.3403, reinforced by the simple moving average cluster near 1.3407. A sustained move above this area could pave the way for a test of higher trend-line barriers around 1.3624 and 1.3808. Initial support, meanwhile, lies around 1.3268, where the former downward resistance line now provides a structural floor. A break below it would leave the pair vulnerable to a deeper retreat within the broader range.

(The technical analysis of this story was written with the help of an AI tool. Know more.)

How Is Pound Sterling Performing Today?

British Pound (GBP) recorded its strongest performance against the New Zealand Dollar today. The table below sets out its percentage changes against the major currencies listed.

	USD	EUR	GBP	JPY	CAD	AUD	NZD	CHF
USD		0.16%	0.10%	-0.66%	-0.19%	0.12%	0.37%	-0.21%
EUR	-0.16%		-0.08%	-0.85%	-0.38%	-0.04%	0.20%	-0.40%
GBP	-0.10%	0.08%		-0.78%	-0.32%	0.02%	0.26%	-0.31%
JPY	0.66%	0.85%	0.78%		0.46%	0.79%	1.00%	0.45%
CAD	0.19%	0.38%	0.32%	-0.46%		0.32%	0.58%	-0.01%
AUD	-0.12%	0.04%	-0.02%	-0.79%	-0.32%		0.22%	-0.33%
NZD	-0.37%	-0.20%	-0.26%	-1.00%	-0.58%	-0.22%		-0.54%
CHF	0.21%	0.40%	0.31%	-0.45%	0.01%	0.33%	0.54%

Percentage movements between the major currencies are displayed in the heat map. Select the base currency in the left-hand column and the quote currency in the top row. For instance, choosing British Pound on the left and following that row across to US Dollar gives the percentage change for GBP (base)/USD (quote) in the corresponding cell.