GBP\/USD fell for a third day and hit a weekly low near 1.3370 in the Asian session on Thursday. It later recovered a few pips to about 1.3400 and was down less than 0.15% on the day.<\/p>\n
The US Dollar rose as traders moved towards safer assets amid ongoing fighting in the Middle East. This demand for the Dollar added pressure to GBP\/USD.<\/p>\n
Iran\u2019s Islamic Revolutionary Guard Corps said it launched a joint operation with Lebanon\u2019s Hezbollah against targets in Israel, Jordan, and Saudi Arabia. The report followed the most intense US-Israeli bombardments on Iran on Tuesday and pointed to a further escalation in the conflict between Israel-US forces and Iran.<\/p>\n
Looking back at the Middle East hostilities in 2025, we recall how the sharp flight to safety benefited the US Dollar. That event established a clear pattern of dollar strength during major geopolitical flare-ups, pressuring pairs like GBP\/USD. This memory should guide our strategies, as markets now price in a higher risk premium for regional instability.<\/p>\n
In the coming weeks, we should anticipate that underlying volatility will remain elevated. This makes hedging with options a sensible approach, particularly buying put options on GBP\/USD to protect against a sudden downturn. Data shows that during the 2025 crisis, one-month implied volatility for the pair jumped by over 30%, and while it has settled, it remains above the five-year average.<\/p>\n
The policy divergence between central banks will also be a key driver. With the US Federal Reserve signaling a more hawkish stance to curb persistent inflation, which sits at 3.1% as of last month’s data, the dollar has a fundamental tailwind. In contrast, the Bank of England is grappling with a weaker UK growth forecast of just 0.5%, making it less likely to match the Fed’s tightening cycle.<\/p>\n
We must also consider the impact on energy markets, given the regions involved in last year’s conflict. Brent crude futures, which spiked to over $110 a barrel during the 2025 escalation, are sensitive to any new developments. Holding long positions in crude oil call options could therefore act as an effective portfolio hedge against a repeat of those events.<\/p>\n
Create your live VT Markets account<\/a>\u00a0and\u00a0start trading<\/a>\u00a0now. <\/b><\/p>\n","protected":false},"excerpt":{"rendered":" GBP\/USD hit weekly low near 1.3370 as safe-haven dollar rose amid escalating Middle East conflict tensions.<\/p>\n","protected":false},"author":103,"featured_media":17033,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[59],"tags":[],"class_list":["post-51290","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-live-updates"],"acf":{"acf_article_selection_author":null},"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/51290","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/users\/103"}],"replies":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/comments?post=51290"}],"version-history":[{"count":0,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/51290\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media\/17033"}],"wp:attachment":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media?parent=51290"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/categories?post=51290"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/tags?post=51290"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}