Sterling fell on Tuesday, trading around $1.3234 at 03:50 ET, as the U.S. dollar held firm ahead of a White House deadline linked to the U.S.–Iran conflict.
The decline extended recent losses, with GBP/USD briefly dipping to an intraday low of $1.3211, while the 52-week low remains at $1.2721.
The dollar gained support from heightened geopolitical uncertainty as investors awaited clarity on a potential ceasefire. A failure to reach an agreement could lead to U.S. and Israeli strikes on Iranian civilian infrastructure, increasing the risk of retaliatory action across the Gulf region.
Rising energy prices have also bolstered the greenback. Further gains in oil and gas amid escalating tensions would be “unambiguously dollar-positive,” according to ING strategist Chris Turner.
Stronger U.S. domestic data has added to dollar strength. The March jobs report surprised to the upside, while markets now largely expect the Federal Reserve’s policy stance to remain unchanged this year, contrasting with expectations for additional rate hikes among other major central banks.
ING noted that stronger activity data and higher energy costs could shift expectations toward Fed tightening. Investors are now focused on Wednesday’s Federal Open Market Committee minutes and Friday’s March CPI report for further guidance.
Headline U.S. inflation is forecast to rise to 3.4% year-on-year from 2.4%. Comments from New York Fed President John Williams will also be closely watched for any change in tone.
ING expects the dollar index (DXY) to stay supported within a 100–100.50 range.
Elsewhere, the euro remained under pressure, with EUR/USD at $1.1544 and trading within a 1.1420–1.1640 band. Markets have reduced expectations of an April ECB rate hike to just below 50%, though around 75 basis points of tightening is still priced in for the year.
ING warned that if the ECB holds off on an April move despite elevated energy prices, the euro could face additional downside pressure.
In Central and Eastern Europe, markets followed global trends. Czech inflation is expected to rise due to higher fuel costs, while Romania’s central bank is projected to keep rates at 6.50% despite persistent double-digit inflation. Poland’s central bank is also expected to maintain its 3.75% rate, with forward guidance later in the week in focus.
In Asia-Pacific, the Reserve Bank of New Zealand is widely expected to keep rates unchanged at 2.25% on Wednesday. The New Zealand dollar has underperformed the Australian dollar this year, and without a hawkish surprise, that divergence may continue.
Thinner liquidity later in the week due to holidays could amplify price swings driven by geopolitical developments.
Sources: Navamya Acharya
THE ETERNAL SOVEREIGN 
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