British Pound sinks as USD shrugs off Hormuz reopening hopes

• GBP/USD retreats despite reports Tehran could reopen Hormuz within days.
• Strong ADP data and hawkish Fed rhetoric lift Dollar.
• UK borrowing overshoot adds pressure despite November BoE hike bets.

The Pound Sterling dives over 0.17% even though newswires reported Tehran’s intention to reopen the Strait of Hormuz, if the United States meets certain conditions. The GBP/USD trades at 1.3343 after peaking at 1.3387.

Sterling slips as Fed tightening bets eclipse Iran de-escalation headlines

Sentiment remains upbeat after Kyodo reported that Tehran told the US administration it would open the Strait of Hormuz in seven days if Washington lifts the blockade on Iran and stops military operations.

Broad US Dollar strength, driven by growing speculation that the Federal Reserve would raise rates once more before year-end, continues to underpin the Greenback.

The US Dollar Index (DXY), which measures the performance of the American currency against six others, is up 0.27% at 100.69, about a two-month high.

Data-wise, the ADP Employment Change 4-week average rose from 16.75K to 20K, an indication of strength in the labor market. Aside from this, Fed speakers are crossing the wires.

Boston Fed Susan Collins said in a LinkedIn post that she supported a rate hike amid risks that inflation could become entrenched above 2%. “With the labour market on a better footing, monetary policy can focus on a timely return to price stability, especially after five and a half years of too-high inflation,” she said.

Regarding geopolitics, US President Trump reiterated that Iran can’t have a nuclear weapon and added that a deal between the US and Iran is possible after the US election.

In the UK, Public Sector Net Borrowing in August rose to £18.3 billion, higher than expectations of £15.7 billion, which triggered a jump in the UK deficit to £77.3 billion in the first five months of the fiscal year, £8.1 billion more than the Office for Budget Responsibility forecast.

Speculation that the Bank of England (BoE) would raise rates at the upcoming November meeting is at 65% via Prime Terminal, which has kept the GBP/USD pair from weakening further below the 1.3300 level.

Nevertheless, if the interest rate differential widens between the two countries, favouring the US, it could open the door for further downside.

GBP/USD Price Forecast: Technical outlook

In the daily chart, GBP/USD trades at 1.3324, keeping a clear bearish tone as spot holds below the clustered simple moving averages (SMA) group around 1.3481 and under several broken ascending trend-line levels that now sit overhead. Price is also trading beneath the nearby descending resistance trend line, whose break reference at 1.3335 caps any immediate recovery attempts, while the Relative Strength Index (14) near 31 suggests the sell-off is stretching into oversold territory rather than signalling a sustainable base.

On the topside, initial resistance emerges at the downtrend line break around 1.3335, followed by the secondary descending barrier near 1.3449. Above there, the SMA cluster around 1.3481 aligns with the former rising support trend line turned resistance at 1.3504, before the higher broken support line near 1.3713 marks a more distant cap on any corrective bounce. On the downside, support is primarily momentum-based, with the RSI hovering close to oversold readings, hinting that while selling pressure remains dominant, the pair could soon attempt a modest pause rather than a decisive reversal unless the overhead technical levels are reclaimed.

(The technical analysis of this story was written with the help of an AI tool. Know more.)