GBP/USD trades around 1.3638 on Tuesday, consolidating near its six-month high of 1.3675 as improving Middle East sentiment supports risk appetite. Traders are now focused on upcoming US economic data and Federal Reserve Chair Kevin Warsh’s speech at the Jackson Hole symposium for fresh clues about the US interest-rate outlook.
Geopolitical developments remain an important driver. Pakistan’s Army Chief Munir reportedly traveled to Iran and proposed lifting the US naval blockade in exchange for reopening the Strait of Hormuz and stopping attacks by proxy groups. Iranian officials described the visit as productive, raising hopes of progress toward de-escalation. Any improvement in the situation could further reduce safe-haven demand for the US Dollar.
The US Dollar Index remains subdued near 98.93, little changed on the day. Recent US data have been mixed. July Building Permits increased 4.3% month-on-month to 1.433 million, recovering from June’s contraction and exceeding the previous 1.374 million reading, although the figure remained below expectations.
US labor-market indicators provided a modestly positive signal, with the ADP four-week average rising to 11.75K from 9.5K previously. However, consumer confidence disappointed, falling to 89.4 against expectations of 90.2. The report showed some improvement in households’ assessment of current conditions and the labor market, but overall sentiment weakened.
Boston Fed President Susan Collins adopted a hawkish tone, warning that inflation remains too high and emphasizing the importance of price stability. She also described the labor market as consistent with full employment and economic growth as broadly near trend.
Sterling continues to receive support from expectations of further Bank of England tightening. Money markets are pricing in at least one additional rate hike by year-end, with a full increase largely anticipated by the December 17 meeting.
Trade idea: GBP/USD remains bullish above 1.3600; buying dips toward 1.3620 could target 1.3700, while a break below 1.3580 would weaken the bullish setup.