GBP/USD Falls as Stronger Dollar and Risk Aversion Weigh on Sterling

GBP/USD is under pressure near 1.3220 as a stronger US dollar and rising risk aversion continue to weigh on the pair. Higher oil prices linked to tensions around the Strait of Hormuz have pushed US Treasury yields higher and strengthened expectations that the Federal Reserve will keep interest rates higher for longer, supporting the dollar.

Sterling remains weak despite a more cautious tone from the Bank of England. Policymakers are moving toward a wait-and-see approach as energy prices rise and inflation could increase toward 3.0 to 3.5%, while weak UK growth and a softer labour market continue to limit upside.

Technically, GBP/USD stays inside a descending channel and below the 50 and 200 SMAs, keeping the outlook bearish. A break below 1.3160 could open the door toward 1.3040, while holding above support may allow a recovery toward 1.3345 and possibly 1.3426.

GBP/USD Daily Chart