British Pound slips as Hormuz attacks revive USD demand

The Pound Sterling (GBP) retreats against the US Dollar (USD) on Tuesday as tensions in the Middle East rise, following reports of attacks on two ships in the Strait of Hormuz. The GBP/USD pair trades at 1.3373, down 0.11%.

GBP/USD falls as Oil spike lifts Fed hike worries

The Greenback remains steady after the Islamic Revolutionary Guard Corps (IRGC) attacked ships that attempted to pass through the Omani route, ignoring the IRGC’s repeated warnings. These developments underpinned Oil prices and consequently the US Dollar, as high energy prices could force the US Federal Reserve (Fed) to raise interest rates.

The US Dollar Index (DXY), which measures the buck’s performance against six currencies, is up 0.05% at 100.93.

Data from the US showed that the trade deficit widened in May, driven by a jump in imports and a decline in exports. The Goods and Services Trade Balance deficit came at $-77.6 billion, more than the $-54.6 billion printed in April.

Aside from this, the New York Fed Survey of Consumer Expectations indicated that households foresee higher prices, with one-year inflation expectations rising from 3.5% in May to 3.7% in June. The data suggests that the Fed might still opt to keep rates unchanged, but could also increase the likelihood of a rate hike.

Money markets have increased the chances for a rate hike at the September meeting, with odds standing at 60.42%. For the July 29 meeting, there’s a nearly 75% chance that the Fed will keep rates unchanged.

In the UK, the economic docket remained absent, yet Sterling has benefited from the drop in Oil prices, which so far remained positively correlated with the Greenback, exerting downward pressure on the Pound.

Furthermore, the likely next Prime Minister, Andy Burnham, reiterated tha the will commit ot the fiscal rules, easing fears amongst traders, who feared that further spending could trigger a jump in UK GILTS and weakness in the GBP/USD.

GBP/USD Price Forecast: Technical outlook

On the daily chart, GBP/USD trades at 1.3375, keeping a mildly bearish tone as it remains capped beneath the latest reading of the 50/100/200-day simple moving average cluster at 1.3403. The pair is trading between the reclaimed upward support trend line anchored near 1.3159 and the descending resistance trend line that comes in at 1.3511, suggesting a consolidative phase within a broader corrective setup. The Relative Strength Index (14) at about 55 has lifted back into positive territory but only hints at stabilizing momentum rather than a clear bullish shift while price action holds below the stacked moving averages.

On the topside, initial resistance is seen at the triple simple moving average cluster around 1.3403, and a sustained break higher would open the way toward the descending trend-line barrier near 1.3511. On the downside, the next meaningful structural floor is the rising support trend line originating from 1.3159, where buyers are likely to defend the broader medium-term uptrend; a daily close below that area would reinforce the bearish bias and expose deeper losses toward the mid-1.31 region.