Pound Sterling softens to near 1.3300 as Middle East conflict fuels US Dollar strength

The GBP/USD pair attracts some sellers to near 1.3300 during the early Asian session on Monday. Escalating hostilities in the Middle East boost a safe-haven currency such as the US Dollar (USD) against the Pound Sterling (GBP). Traders will take more cues from the US February Consumer Price Index inflation report (CPI) later on Wednesday. 

Iran named Mojtaba Khamenei as the country’s new supreme leader just over a week after his father, Ayatollah Ali Khamenei, was killed in US-Israeli strikes, per CNBC. Meanwhile, US President Donald Trump said that he would exert influence over Iran’s next supreme leader, saying that whoever is picked for the role without Washington’s approval is “not going to last long." 

Signs of a prolonged war in the Middle East continue to support the Greenback and create a headwind for the major pair in the near term. “The dollar is the biggest beneficiary in the current environment, given the USD’s safe haven status and the US’ position as a net energy exporter,” said Carol Kong, a strategist at Commonwealth Bank of Australia in Sydney. “How much higher the dollar will go from here depends on the depth and duration of the conflict, which remains highly uncertain.”

On the other hand, a disappointing US employment report might cap the downside for GBP/USD. US Nonfarm Payrolls (NFP) fell by 92,000 in February, compared to the market consensus of a rise of 59,000 and the downwardly revised January total of 126,000. The Unemployment Rate edged higher to 4.4% during the same period as jobs declined across key areas.