British Pound climbs as USD fades, Hormuz risk keeps Fed in play

The Pound Sterling rises by over 0.23% amid thin trading conditions, as US markets remained closed for the Labour Day weekend, while the US-Iran conflict escalated, with both countries exchanging strikes around the Strait of Hormuz. The GBP/USD trades at 1.3541.

During the overnight session, the US launched attacks on 3 Iranian tankers in retaliation for the IRGC targeting US Navy warships with ballistic missiles. Irans navy said that it targeted oil vessels that were sailing through unauthorised routes in the Strait and three additional US-flagged ships in other areas.

Aside from this, Tehran said that a deal with Oman to manage shipping through the Strait of Hormuz is imminent, which could tighten Irans control over the Strait.

In the meantime, the UK‘s chancellor Healey said that the plans to give regions more power to attract private investment and pledged to fiscal discipline, which helped restore Britain’s credibility in the bond market

The US Dollar Index (DXY), which tracks the performance of the bucks value against six currencies, is down 0.29% at 98.87

Traders' eyes are focused on the release of US inflation prints on the consumer and producer side. Given the hawkish tilt by Fed Chair Kevin Warsh, along with a strong Nonfarm Payrolls report last Friday, a benign reading could deter the Federal Reserve from raising rates.

On the other hand, a jump in inflation could push the Fed to raise rates, contrary to the preference of US President Trump, who said last week that interest rates need to be lowered.

Money markets had priced in a 63% chance of a 25-basis-point rate increase by the Fed at the September 15-16 meeting, according to Prime Terminal.

In the daily chart, GBP/USD trades at 1.3547. The pair maintains a modest bullish bias as it holds above the simple moving average cluster around 1.3461 and has reclaimed former descending trend-line resistance near 1.3369 as support. The Relative Strength Index (14) hovers just above the midline around 54, which suggests mildly positive momentum but falls short of signaling overbought conditions, hinting at a constructive yet not overstretched advance.

On the topside, initial resistance is seen at the rising trend-line coming from the 1.3159 low, now projecting around 1.3606, ahead of a higher ascending boundary near 1.3631 from the secondary uptrend. On the downside, immediate support is provided by the nearby descending trend-line turned floor around 1.3544, with the simple moving average at 1.3461 and the earlier broken downward trend line near 1.3369 offering deeper layers of demand if a pullback develops.

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

The table below shows the percentage change of British Pound (GBP) against listed major currencies today. British Pound was the strongest against the New Zealand Dollar.

The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the British Pound from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent GBP (base)/USD (quote).

Author

Christian Borjon Valencia

FXStreet

Markets analyst, news editor, and trading instructor with over 14 years of experience across FX, commodities, US equity indices, and global macro markets.