Pound Sterling steadies above two-week low vs USD; bulls seem hesitant amid Iran tensions

The British pound stabilized above a two-week low against the U.S. dollar after earlier declines driven by risk-off flows linked to escalating tensions in Iran. The geopolitical uncertainty has bolstered demand for safe-haven assets, reinforcing the U.S. dollar through improved yield and capital flow differentials. While GBP/USD found temporary footing, bulls remain cautious as any further escalation in the Middle East could trigger broader risk aversion, weighing on sterling-sensitive assets and commodity currencies. The pound's near-term direction hinges on the interplay between U.S. dollar strength and oil price volatility, given the UK’s exposure to energy market swings. Traders will closely monitor the upcoming U.S. CPI inflation report, which could reinforce or alleviate Fed rate cut expectations and recalibrate global rate differentials.

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