Pound Falls Against the Dollar on US-Iran Tensions and Weak UK PMI

The  Sterling pound today fell against the  US dollar as  tensions between the  US and  Iran escalated overnight and  investors dumped riskier assets such as  the  pound. The  GBP/USD currency pair has given up most of  the  gains made in  December following Boris Johnson‘s landslide election win that saw the  pair spike to  multi-month highs.
The  GBP/USD currency pair today fell from an  opening high of  1.3159 in  the  Asian session to  a  low of  1.3067 in  the  mid-London session and  was trading near these lows at  the  time of  writing.
The  currency pair extended yesterday’s decline amid a  cautious market environment driven by  existing global risks. The  killing of  a  top Iranian general by  the  US triggered a  sell-off in  most riskier assets as  Iran vowed to  retaliate against the  US. Investors are worried that Iran’s response could destabilise the  global economy, given that it controls the  Strait of  Hormuz, which is a  crucial waterway for  Middle Eastern oil shipments. The  release of  the  disappointing Markit/CIPS UK Construction PMI for  December, which came in  at  44.4 missing consensus estimate set at  45.9 also contributed to  the  pair’s fall.
The release of the weak UK net lending report for November by the Bank of  England also did not help the cable given the significant drop witnessed. The upbeat UK mortgage approvals data for November also released by the BoE could not stop the pair’s fall.
The  cable’s future performance is likely to  be affected by  geopolitical events as  investors wait for  Iran’s response.
The  GBP/USD currency pair was trading at  1.3077 as  at  10:51 GMT having fallen from a  high of  1.3159. The  GBP/JPY currency pair was trading at  141.28 having dropped from a  high of  142.74.

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