- GBP/USD stays pressured as traders trim BoE hike bets amid optimism of easing Middle East tensions.
- BoE’s Bailey said that the central bank won’t rush rate decisions amid the energy shock from the Iran conflict.
- Lebanon’s army recorded multiple Israeli ceasefire violations after the truce took effect.
GBP/USD loses ground for the third successive day, trading around 1.3520 during the Asian hours on Friday. The Pound Sterling (GBP) remains under pressure as traders pare back expectations for a Bank of England (BoE) rate hike, amid increasing optimism that tensions in the Middle East may be easing.
BoE Governor Andrew Bailey told BBC News on Thursday that the central bank is “not going to rush to judgments” on interest rate increases as global policymakers navigate an energy price shock driven by the Iran conflict. Bailey noted that while higher oil and gas prices will feed into inflation, other factors make rate decisions “very, very difficult.”
BoE policymaker Megan Greene said in a Bloomberg TV interview on Wednesday that markets were justified in scaling back bets on rate hikes following last month’s surge. Greene indicated that the current market pricing, suggesting two or fewer rate increases this year, is “about right.”
The GBP/USD pair also declines as the US Dollar (USD) edges higher, supported by increased safe-haven demand following a CNN report that the Lebanese army recorded multiple ceasefire violations by Israel after the truce came into effect. US President Donald Trump announced on Thursday that Israel and Lebanon agreed to a 10-day ceasefire that started at 5 PM ET.
Lebanon accused Israel of carrying out “a number of acts of aggression,” noting that intermittent shelling has affected several villages in southern Lebanon. The army also urged residents to delay returning to southern towns and villages amid the reported ceasefire breaches.
However, market sentiment could improve as Washington and Tehran are expected to resume discussions over the weekend, with President Trump maintaining an optimistic tone on the chances that both sides could secure a lasting ceasefire before its expiration next week.
