GBP/USD Drops as Focus Shifts to Energy Risks and BoE Caution
GBP/USD traded around 1.3520 during the Asian session on Friday (April 17), a third consecutive day of weakness. The pound was pressured as market participants cut bets on a Bank of England (BoE) interest rate hike amid growing optimism that tensions in the Middle East could ease.
BoE Governor Andrew Bailey said on Thursday that the central bank will "not rush" into making an interest rate decision as global policymakers face an energy price shock triggered by the Iran conflict. Bailey said rising oil and gas prices will indeed feed into inflation, but other factors make rate decisions more difficult.
BoE policymaker Megan Greene also signaled caution. In a Bloomberg TV interview on Wednesday, Greene said the market was right to lower rate hike expectations after last month's surge in bets, and that current pricing—pointing to two or fewer hikes this year—was "about right."
Externally, pressure on GBP/USD increased as the US dollar strengthened slightly, supported by demand for safe-haven assets after a CNN report reported that the Lebanese military recorded several ceasefire violations by Israel after the ceasefire came into effect. US President Donald Trump previously announced that Israel and Lebanon had agreed to a 10-day ceasefire, starting Thursday at 5:00 PM ET.
However, sentiment could potentially change if Washington-Tehran talks resume over the weekend, with Trump remaining optimistic about the possibility of reaching a more permanent ceasefire before the end of next week. The market will weigh a combination of the direction of Bank of England (BoE) expectations, the safe-haven dynamics of the US dollar, and geopolitical developments affecting energy prices and global risk perceptions. (asd)
Source: Newsmaker.id
