The sterling pound collapses through the escalation of the Israel-Iran conflict

• The sterling pound falls sharply against its main peers, since Israel’s attack to Iran has reduced the demand for risk assets.
• Both the Fed and the BOE are expected to keep the stable interest rates next week.
• Investors expect the BOE to reassess their “gradual and cautious” monetary expansion guide “due to recent weak economic data.

The sterling pound (GBP) has a lower yield against its main peers on Friday, except for antipodal currencies, since the feeling of the market becomes a verso to risk amid the growing geopolitical tensions in the Middle East.

Israel has announced a war against Iran after attacking dozens of objectives in the northeast region of Tehran, including nuclear facilities and military bases. Israeli Prime Minister Benjamin Netanyahu has clarified that his army has begun the “Operation León Ascendent” to stop Iran to build nuclear eyebrows, citing that the operation aims to “reverse the Iranian threat to Israel’s own survival.”

The US president Donald Trump also said earlier on the day they will “cannot have a nuclear bomb,” supporting Israel’s attack.

The increase in tensions between Tel Aviv and Tehran has led investors to resort to refuge assets such as the US dollar (USD). He US dollar index (DXY), which tracks the value of the dollar against six main currencies, has risen 0.45% to about 98.30, abruptly recovering from the minimum of three years of 97.60 registered on Thursday.

Apart from geopolitical headlines, the next triggers for the GBP/USD torque will be the monetary policy ads of both the Federal Reserve (Fed) as of Bank of England (BOE) next week. Both central banks are expected to maintain the rates of stable interest.

What moves the market today: the sterling pound descends against the US dollar

• The sterling pound collapses to about 1,3530 against the US dollar during Friday’s European negotiation hours. The GBP/USD torque faces a strong sales pressure as investors become aES -Risk in the midst of the growing tensions in the Middle East.
• Earlier in the day, USA clarified that she has no participation in the Israel-Iran conflict and said Washington would look for conversations with Tehran to finish the tensions peacefully. However, Tehran has refused to join the US at the negotiating table. The high -ranked Iranian legislator Boroujerdi said that the sixth round of conversations with the US “will not be carried out after Israeli attacks,” according to Iran International.
• Next week, the assessment of the US dollar will be influenced by the result of the FED policy meeting on Wednesday. According to the CME Fedwatch tool, the Fed is expected to maintain stable interest rates in the current range of 4.25%-4.50%.
• The operators are increasingly sure that the Fed will avoid any adjustment in monetary policy, since those responsible for the policy have indicated that interest rates should remain at their current levels until they obtain clarity on how the new economic policies announced by President Trump will impact inflation and economic perspectives.
• Investors will closely monitor the Fed points chart, which shows where the officials who go the short and long term interest rates are waiting. The CME Fedwatch tool shows that the Fed will reduce interest rates at the September meeting. Currently, operators expect the Federal Reserve to cut the fees at 55 basic points by the end of the year, which means about two cuts of 25 basic points, Reuters reported.
• In the United Kingdom, it is also anticipated that the BOE maintains interest rates without changes in 4.25% on Thursday. However, market participants expect the Central Bank to reevaluate their “gradual and careful” monetary relaxation guide in the middle of the deceleration of labor demand and economic contraction in the monthly data of the gross domestic product for April.
• This week, the Office of National Statistics (ONS) reported that the unemployment rate increased to 4.6% in the three months that ended in April, the highest level seen since July 2021, and employers added less jobs in the same period. Cracks are evidenced in the labor market after the contribution of employers to the National Insurance (NI) increased to 15% from 13.8% in April.
• Meanwhile, the United Kingdom’s economy contracted at a faster rate than projected from 0.3% in April, and manufacturing industry data contracted abruptly.
• Before the BOE monetary policy advertisement, investors will focus on consumer price index (ICC) of the United Kingdom for May, which will be published on Wednesday.

Technical Analysis: The sterling pound faces sales pressure above 1,3600

The Pound sterling It falls sharply to about 1,3530 against the US dollar after facing sales pressure near the maximum of three years around 1,3630. Despite the setback, the short -term trend of the GBP/USD torque remains a bullish since the 20 -day exponential (EMA) mobile average is inclined to rise around 1,3490.

The 14 -day relative force index (RSI) falls below 60.00 and points down, pointing out a rapid loss of bullish impulse. However, this could be resumed if the RSI manages to resume the level of 60.

On the positive side, the maximum of January 13, 2022 of 1,3750 will be a key obstacle to the pair. Looking down, the horizontal line drawn from the maximum of September 26, 1,3434 will act as a key support zone.