GBP/USD Forecast: Pound Sterling Edges Higher on Rising Hormuz Tensions

Modified: Tuesday, 5 May 2026 22:31 BST - Written by Tim Boyer

STORY LINK GBP/USD Forecast: Pound Sterling Edges Higher on Rising Hormuz Tensions

The Pound US Dollar (GBP/USD) exchange rate crept higher on Tuesday, supported by a mild pickup in market confidence.

At the time of writing, the pair was hovering around $1.3490, marking a slight gain of roughly 0.2% compared to the day’s opening levels.

The US Dollar (USD) found it difficult to build momentum on Tuesday, even as the latest US employment figures came in marginally stronger than expected.

Data showed job openings stood at 6.87 million in March, easing from a revised 6.92 million in February but still ahead of forecasts. This suggested the US labour market remains relatively robust despite ongoing geopolitical pressures.

Attention, however, remained fixed on the Middle East, where sentiment improved slightly. A pause in attacks around the Strait of Hormuz, alongside comments from US Defence Secretary Pete Hegseth indicating the ceasefire with Iran is holding, helped calm nerves and reduced demand for the safe-haven currency.

Sterling gained modest traction on Tuesday, with investors increasingly focused on the Bank of England’s policy outlook.

Persistently high energy prices, driven by instability in the Middle East, continue to stoke inflation concerns in the UK. In response, markets are leaning more heavily towards the prospect of further monetary tightening.

This shift in expectations has strengthened bets that the BoE could opt to raise interest rates at its next meeting, providing a degree of underlying support for the Pound.

Near-Term GBP/USD Forecast: US Jobs Data and UK Politics in Focus

Looking to the midweek session, upcoming US economic releases are likely to play a key role in shaping GBP/USD direction. In particular, the ADP employment report may influence expectations for the more closely watched non-farm payrolls figures later in the week. A solid reading could lend the US Dollar some support.

At the same time, domestic political developments in the UK could introduce fresh volatility for Sterling. With local elections approaching, concerns are growing that a poor showing for the Labour government might spark internal tensions and weigh on investor sentiment.

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TAGS: Pound Dollar Forecasts