Pound Sterling Holds Firm Near Multi-Year Highs as USD Softens

Pound Sterling Holds Firm Near Multi-Year Highs as USD Softens

The Pound Sterling (GBP) is maintaining strong gains against the US Dollar (USD), trading near the 1.3650 level — a new three-year high — during Wednesday’s European session. This strength in the GBP/USD pair reflects a broader decline in safe-haven demand for the Greenback following the ceasefire agreement between Israel and Iran.

Ceasefire News Weakens Safe-Haven Demand

The ceasefire, announced by former President Donald Trump via Truth Social, has helped improve market sentiment, reducing demand for the US Dollar. As a result, the US Dollar Index (DXY) remains subdued near 98.00, unable to recover from recent lows.

Fed Signals Patience on Interest Rates

In his bi-annual testimony to the US House Financial Services Committee, Federal Reserve Chair Jerome Powell emphasized the need to closely watch the inflationary impacts of tariffs before making any policy changes. Powell’s stance reinforces expectations that interest rates will remain unchanged in the near term, further dampening USD strength.

BoE’s Bailey Flags Labor Market Easing

Across the Atlantic, Bank of England Governor Andrew Bailey raised concerns about waning labor market strength in the UK, though it has yet to significantly affect GBP sentiment. Markets remain focused on the Bank’s data-driven approach, especially as the UK economy continues to show resilience.

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