The GBP/USD pair strengthened to nearly 1.3560 during Tuesday’s early European session, supported by a weaker US Dollar. Traders are closely watching upcoming speeches by Bank of England Governor Andrew Bailey and Federal Reserve Chair Jerome Powell, scheduled for later in the day.
On Monday, Federal Reserve Governor Michelle Bowman indicated she favors an interest rate cut at the July meeting if inflation remains under control.
Her view aligns with Fed Governor Christopher Waller, who said last Friday that a rate reduction in July is possible.
These dovish signals from Fed officials have put pressure on the US Dollar and provided support for GBP/USD in the short term. According to the CME Group’s FedWatch tool, traders currently assign about a 23% chance of a rate cut in July and a 78% probability of one in September.
Meanwhile, tensions in the Middle East continue to influence the market. Although US President Donald Trump announced a “complete and total” ceasefire between Israel and Iran, the Israel Defense Forces reported missile launches from Iran toward southern Israel early Tuesday. This ongoing uncertainty may increase safe-haven demand, indirectly supporting the Pound Sterling.
