GBP/USD Forecast: Pound Sterling Falls as Middle East Tensions Escalate

Modified: Monday, 30 March 2026 21:01 BST - Written by Ben Hughes

STORY LINK GBP/USD Forecast: Pound Sterling Falls as Middle East Tensions Escalate

The Pound US Dollar (GBP/USD) exchange rate slipped to its lowest level in a fortnight on Monday, as escalating geopolitical tensions dampened market sentiment and drove demand for safer assets.

At the time of writing, GBP/USD was trading at $1.3229, down roughly 0.2% on the day.

The US Dollar firmed at the beginning of the week, supported by a cautious market mood as investors gravitated towards safer assets amid rising tensions in the Middle East.

Risk aversion strengthened after Yemen’s Houthi forces, closely aligned with Iran, entered the conflict over the weekend, fuelling fears of a wider regional escalation and increased global economic disruption.

Comments from President Donald Trump sparked some fluctuation but ultimately added to the sense of geopolitical uncertainty.

Although Trump indicated that Iran was allowing 20 oil tankers to pass through the Strait of Hormuz as a present and referenced serious discussions between the two sides, he also renewed threats to target Iranian energy infrastructure if the strait is not reopened swiftly.

Ongoing concerns that the conflict could intensify and inflict significant damage on the global economy unsettled markets, boosting demand for the US Dollar.

The Pound struggled to gain traction against the backdrop of a risk-off market environment.

With investors favouring safer assets, Sterling remained on the back foot as sentiment deteriorated.

A lack of notable UK economic data left the currency without clear direction, with no major domestic releases to help guide movement.

Short-Term GBP/USD Forecast: US Data in Focus

The UK’s final GDP reading for the fourth quarter of 2025 could shape movement in the Pound. If the data confirms that the economy expanded by only 0.1%, Sterling may face some downside pressure, while any revision could trigger more pronounced volatility.

For the US Dollar, February’s Job Openings and Labor Turnover Survey may act as a potential headwind if it shows a decline in the number of available roles.

A forecast drop in US consumer confidence for March could also weigh on the US Dollar, as rising prices linked to the conflict in Iran dampen household sentiment.

Developments in the Middle East will remain a key driver. A cautious market mood and fears of further escalation could bolster the US Dollar and potentially push the pairing lower.

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TAGS: Pound Dollar Forecasts