GBP\/USD rose slightly to about 1.3580 in Asian trading on Monday. Further gains may be capped by uncertainty linked to the Middle East, with the US April employment report due on Friday.<\/p>\n
US President Donald Trump said the US would begin efforts on Monday morning to free ships stuck in the Strait of Hormuz as a \u201chumanitarian gesture\u201d to help neutral countries during the US-Israeli war with Iran. An Iranian official said US involvement in Hormuz would be treated as a breach of the ceasefire, and said the Strait of Hormuz and the Persian Gulf are not a place for rhetoric.<\/p>\n
Iran previously said the US responded to its 14-point plan via Pakistan and that it was reviewing the reply. Trump said the proposal was unlikely to be acceptable.<\/p>\n
Renewed tensions can support the US Dollar as a safe-haven and weigh on GBP\/USD. Last week, the Bank of England and the US Federal Reserve kept interest rates unchanged.<\/p>\n
BoE Governor Andrew Bailey said that if conflict-related price pressures became severe, \u201cforceful tightening\u201d would be needed. He also said the Bank would watch developments and their effect on the UK economy.<\/p>\n
We recall a similar situation back in 2025 when tensions in the Strait of Hormuz caused sharp moves in GBP\/USD. Today, with growing uncertainty surrounding maritime trade lanes, we are seeing history rhyme. This suggests the pound’s recent stability could be fragile, much like it was then.<\/p>\n
In the past, geopolitical stress consistently pushed capital into the US Dollar, creating headwinds for pairs like GBP\/USD. With the Cboe FX Volatility Index creeping up by 4% over the last month to 7.9, we see traders already pricing in higher risk. Therefore, buying short-dated US Dollar call options against the pound could be a prudent hedge against a sudden risk-off move.<\/p>\n
We remember the Bank of England\u2019s warning in 2025 about a \u201cforceful tightening\u201d if conflict-driven inflation took hold. Given that UK services inflation remains sticky at 3.4%, well above the Bank’s target, any supply chain disruption now could force their hand much faster than the market expects. This makes interest rate futures sensitive to each new headline, offering opportunities for those positioned for a hawkish surprise.<\/p>\n
The main takeaway from the 2025 playbook is that uncertainty itself, not just direction, is the primary factor to trade. Instead of picking a direction for GBP\/USD, we should consider strategies like long straddles using options, which profit from a large move in either direction. One-month implied volatility for the pair sits at just 6.8%, a level that seems too low given the potential for a sudden breakout in the coming weeks.<\/p>\n
The Strait of Hormuz situation then was a direct threat to oil supply, and today’s maritime tensions carry similar risks for energy transport. With Brent crude already trading up 7% this quarter to $89 a barrel, any escalation could quickly test last year’s highs. This would hit the UK, a net energy importer, particularly hard, likely weighing on Sterling’s value against the dollar.<\/p>\n
Create your live VT Markets account<\/a>\u00a0and\u00a0start trading<\/a>\u00a0now. <\/b><\/p>\n","protected":false},"excerpt":{"rendered":" GBP\/USD edges up near 1.3580; Middle East tensions and Friday\u2019s US jobs report may cap gains.<\/p>\n","protected":false},"author":38,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[46],"tags":[],"class_list":["post-46485","post","type-post","status-publish","format-standard","hentry","category-live-updates"],"acf":[],"aioseo_notices":[],"featured_image_src":null,"featured_image_src_square":null,"author_info":{"display_name":"josephine","author_link":"https:\/\/www.vtmarketsglobal.com\/en\/author\/josephine\/"},"_links":{"self":[{"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/posts\/46485","targetHints":{"allow":["GET","POST","PUT","PATCH","DELETE"]}}],"collection":[{"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/users\/38"}],"replies":[{"embeddable":true,"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/comments?post=46485"}],"version-history":[{"count":0,"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/posts\/46485\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/media?parent=46485"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/categories?post=46485"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vtmarketsglobal.com\/en\/wp-json\/wp\/v2\/tags?post=46485"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}