Pound Sterling declines against US Dollar as US ground invasion plans underpin risk-off mood
The Pound Sterling (GBP) trades lower against the US Dollar (USD) at around 1.3240 in the opening trade at the start of the week, the lowest level seen in almost two weeks. The GBP/USD pair faces selling pressure as fears of a potential United States (US) ground invasion in Iran have weighed on demand for riskier assets.
During the press time, S&P 500 futures are 0.5% down, reflecting a dismal market sentiment. The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, extends its winning streak for the fifth trading day on Monday, rising to near 100.35.
Late Thursday, a Wall Street Journal (WSJ) report showed that the US Pentagon is considering sending 10,000 additional troops to Iran. In response, Iran’s Brigadier General Ebrahim Zolfaqari has issued a stark warning on the Iranian state TV, saying that “US troops will be good food for sharks of the Persian Gulf”.
Fear of further widening of Middle East conflicts prompts risks of persistently higher oil prices, a scenario that is unfavorable for currencies from economies, such as the United Kingdom (UK), that rely heavily on oil imports to meet their energy needs.
On the macro front, major triggers for the GBP/USD pair will be key US economic data releases this week, which include various labor market-linked indicators, especially the Nonfarm Payrolls, and the ISM Purchasing Managers’ Index (PMI) data, which will influence market expectations for the Federal Reserve’s (Fed) monetary policy outlook.
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
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