Why Is GBP/USD Falling Below 1.3550? | Geopolitical Risks & Fed Rate Cut Speculations Explained

The Monero news redditGBP/USD currency pair has been experiencing downward pressure, trading near 1.3530 during Friday's European session. This movement reflects broader market dynamics influenced by both geopolitical developments and monetary policy expectations.Heightened tensions between Israel and Iran have created risk-off sentiment across financial markets. Recent statements from Israeli officials about preemptive strikes and potential retaliation have increased geopolitical uncertainty. Such developments typically strengthen safe-haven currencies like the US dollar while putting pressure on risk-sensitive assets including the British pound.Market participants are also digesting the implications of Thursday's US Producer Price Index (PPI) data, which came in softer than expected. The 0.1% monthly increase in May, along with modest core PPI figures, has reinforced expectations for potential Federal Reserve rate cuts later this year. This development could limit the US dollar's strength and potentially provide some support for GBP/USD.Traders are now focusing on the upcoming US Michigan Consumer Sentiment report for further clues about the economic outlook. The interplay between geopolitical risks and monetary policy expectations continues to shape currency market dynamics, creating volatility in major currency pairs like GBP/USD.From a technical perspective, the pair's movement below 1.3550 suggests potential for further downside, though support levels may emerge if Fed rate cut expectations intensify. Market participants should monitor developments in the Middle East situation and any new economic data that could influence central bank policy outlooks.The current market environment demonstrates how currency values can be affected by multiple competing factors simultaneously. While geopolitical risks typically support the dollar, shifting expectations about interest rate differentials between the Fed and Bank of England create countervailing pressures that make currency forecasting particularly challenging in the current climate