Pound Sterling rises slightly as markets factor in chances of two BoE rate increases
GBP/USD Edges Up Amid Quiet Holiday Trading
During Friday's Asian session, the GBP/USD pair saw a slight increase, hovering near 1.3230 after experiencing minor declines the previous day. With the Good Friday holiday underway, market activity is expected to remain muted.
The British Pound finds some backing as investors anticipate the Bank of England will implement two interest rate increases in 2026, driven by mounting energy costs and persistent inflation worries. Still, Bank of England Governor Andrew Bailey has cautioned that these expectations might be overly optimistic.
Despite this support, gains for GBP/USD may be capped, as the US Dollar could strengthen on the back of heightened safe-haven demand. This follows recent warnings from US President Donald Trump regarding Iran.
President Trump refrained from providing details about reopening the Strait of Hormuz, instead signaling the possibility of increased military operations in the coming weeks and issuing stern warnings to Iran. In response, Iranian Foreign Minister Abbas Araghchi condemned recent US attacks on civilian targets, asserting that such actions would not force Iran to back down and instead highlighted what he described as US disarray and ethical decline.
Meanwhile, Chicago Fed President Austan Goolsbee voiced concerns about surging oil prices, warning that higher gasoline costs could make it harder to control inflation, especially if they push inflation expectations higher.
Correction as of April 3, 04:05 GMT: The headline now reflects that traders are factoring in two potential Bank of England rate hikes, not rate cuts.
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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