GBP/USD strengthens to near 1.3560 in Tuesday’s early European session.
Dovish Fed comments undermine the US Dollar.
Trump announced a complete and total ceasefire between Israel and Iran.
The GBP/USD pair gains traction to around 1.3560 during the early European session on Tuesday, bolstered by the weaker US Dollar (USD). Traders will closely watch the Bank of England's (BoE) Governor Bailey speech, along with the Federal Reserve's (Fed) Chair Jerome Powell’s semiannual testimonies later on Tuesday.
Federal Reserve (Fed) Governor Michelle Bowman said Monday she would favor an interest rate reduction at the next policy meeting in July so long as inflation pressures stay muted. Bowman's comments echo those of Fed Governor Christopher Waller, who said on Friday that he believes the US central bank could consider a rate cut in July.
Dovish remarks from the Fed officials could weigh on the Greenback and act as a tailwind for the major pair in the near term. Traders are now pricing in nearly a 23% chance of a move at the July meeting, with the possibility of about 78% that the Fed will cut in September, according to the CME Group’s FedWatch tool.
On the other hand, the uncertainty surrounding a ceasefire between Israel and Iran and renewed tensions in the Middle East could boost the safe-haven flows, supporting the Pound Sterling (GBP). The Israel Defense Forces (IDF) said early Tuesday that it has identified missiles launched from Iran toward southern Israel, even though US President Donald Trump stated that a "complete and total" ceasefire between Israel and Iran will go into effect.
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