Forex News

• GBP/USD hovers around 1.3400 as US CPI holds at 2.4% YoY and core at 2.5%.
• Oil risks mount as Iran warns crude could surge to $200 per barrel.
• Fed easing bets trimmed to ~30 bps amid sticky inflation.

The Pound Sterling (GBP) remains firm during the North American session on Wednesday, even though the Middle East conflict entered its twelfth day of hostilities. Inflation in the US boosted the Greenback’s prospects, yet GBP/USD trades at around 1.3400, virtually unchanged.

Sterling steadies as markets weigh Middle East risks against steady US CPI

Market mood is mixed as traders digest the latest developments of the US, Israel and Iran conflict. Iran's military commented that the world should be prepared for Oil to hit $200 a barrel, after three vessels were attacked on Wednesday.

In response, the International Energy Agency (IEA) recommended releasing 400 million barrels of oil to temper soaring prices amid the Middle East conflict.

Aside from geopolitical jitters, the US Consumer Price Index (CPI) in February came as expected, with headline inflation rising 2.4% YoY, unchanged from January’s print. Excluding volatile items, the so-called core CPI rose by 2.5% YoY, as expected, aligned also with the previous month’s number.

Traders trimmed bets on a Federal Reserve (Fed) rate cut in 2026 following the CPI release, as depicted by Prime Market Terminal. Money markets expect 30 basis points of easing towards December.

In the UK, the finance minister Rachel Reeves said it's too soon to take measures to shield households from soaring energy prices spurred by the Middle East conflict.

The docket in Britain was absent, yet traders should note that Oxford Economics estimates the UK inflation could be 0.4% higher if the Strait of Hormuz remains shut for up to two months.

This week, the UK economic schedule will feature a speech by the Bank of England Governor (BoE) Andrew Bailey. In the US, traders' focus shifts to Initial Jobless Claims, the Balance of Trade, and housing data.

GBP/USD Price Forecast: Technical outlook

In the daily chart, GBP/USD trades at 1.3399. The near-term bias is mildly bearish, as the pair holds below the confluence of the declining resistance trend line from 1.3869 and the clustered simple moving averages around 1.35, which now cap the upside after being broken earlier. Price has also slipped back under the prior ascending support line that had been guiding the advance from 1.3035, signalling waning bullish momentum and leaving recent rebounds constrained beneath the former breakout zone. The steady deterioration in the Fed Sentiment Index over recent sessions reinforces a softer risk backdrop, which aligns with the pair’s inability to reclaim the broken trend confluence.

Initial resistance emerges near 1.3430, where the descending trend line now meets the underside of the moving-average group, followed by 1.3500 as a more significant barrier if buyers stage a recovery. A daily close above 1.3500 would be needed to negate the current downside bias and reopen the 1.36 area. On the downside, immediate support is seen at 1.3360, the latest swing low, with a break exposing 1.3330 and then 1.3300. A sustained move below 1.3300 would confirm renewed selling pressure and leave the pair vulnerable to a deeper decline within the broader corrective phase.

(The technical analysis of this story was written with the help of an AI tool.)

Isabel Schnabel, member of the executive board of the European Central Bank (ECB), said on Wednesday that they must monitor the persistence of the energy price shock in Europe and stay vigilant for upside inflation risks, in a speech at the Frankfurt School of Finance and Management Centre for Central Banking in Germany.

Key takeaways:

We must monitor the persistence of the energy price shock.

We must be vigilant to upside inflation risks.

Monetary policy remains in a good place.

March projections to partly reflect the Iran shock."

(This story was corrected on March 11 at 16:17 GMT to fix a mispelling in Isabel Schnabel's surname.)

French President Emannuel Macron said they will engage with several countries to limit measures to restrict exports, adding that there's obviously a need for a definition of military and political objectives in the war in Iran at a G7 leaders' video conference on Wednesday.

Key takeaways:

We will engage with several countries to limit measures to restrict exports.

There is no justification to lift sanctions on Russia.

It is obvious there is a need for definition of military and political objectives on war in Iran.

It will take a few weeks to coordinate Hormuz ship escorts.

Release of strategic reserves represents 14.5 mln barrels in France.

Government may decide further measures to cushion oil price increase for French consumers."

Commerzbank’s Tatha Ghose says Hungarian inflation has fallen back within target on core measures, validating the MNB’s earlier rate cut and dovish pivot. He sees room for further gradual easing conditional on continued price moderation and stable external conditions, and does not expect the easing cycle to weigh on the forint, which remains driven by global factors.

Falling inflation allows gradual rate cuts

"More importantly, our preferred inflation measure, which is calculated from month-on-month change of core price level (seasonally-adjusted), has now moderated to within target for most core inflation measures."

"The data now suggest that this may have been a temporary divergence – disinflationary forces are finally becoming more entrenched and broad-based."

"Of course, the latest figures provide justification for further gradual easing, with the pace and scale of future cuts dependent on the continued moderation of price pressures and the stability of the external environment."

"We do not anticipate a negative impact of rate cuts on the forint even in the medium-term because the easing cycle is fundamentally backed by inflation improvement."

"In any case, more significant global developments have been driving HUF movements over the past week and a softer CPI print did not stand in the way of the currency’s rebound yesterday."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)

• Gold struggles below $5,200 as a firmer US Dollar and higher Treasury yields cap gains.
• Escalating US-Iran war keeps geopolitical tensions elevated.
• Technically, XAU/USD holds above the rising 100-period SMA on the 4-hour chart, keeping the near-term bias mildly bullish.

Gold (XAU/USD) trades with a mild downside bias on Wednesday, failing to build on the previous day’s gains as the US Dollar (USD) extends its intraday advance and Treasury yields edge higher after US inflation data came in broadly in line with expectations.

At the time of writing, XAU/USD is trading around $5,180, pulling back modestly after hitting a daily high near $5,223.23.

US inflation holds steady, reinforcing expectations for a Fed pause

The latest US inflation data showed that the Consumer Price Index (CPI) rose 0.3% MoM in February, matching market expectations and accelerating from 0.2% in January. On an annual basis, headline CPI held steady at 2.4% YoY, also in line with forecasts.

Core CPI, which excludes volatile food and energy prices, rose 0.2% MoM, easing from the 0.3% increase recorded in the previous month. The annual core CPI reading remained unchanged at 2.5%.

The data indicate that price pressure remains contained but persistent and well above the Federal Reserve’s (Fed) 2% target, pointing to a gradual disinflation trend.

Although the Fed is widely expected to hold rates steady at next week’s meeting, the data support the view that policymakers may remain patient in the months ahead unless inflation cools more decisively.

US-Iran war puts Strait of Hormuz and global Oil supply in focus

Geopolitical tensions surrounding the ongoing US-Iran conflict remain front and center, with no clear signs of easing as the war enters its 12th day, keeping markets on edge.

The United States (US) and Israel continue to bombard Iranian military targets, while Tehran retaliates with missile and drone attacks against US and Israeli assets across the region.

US President Donald Trump said on Wednesday that the war with Iran could end “soon,” telling Axios in a brief phone interview that there is “practically nothing left to target.”

As the conflict expands, the Strait of Hormuz has become a key focal point. Shipping through the strategic waterway has slowed significantly as security risks increase. The US military said it destroyed 16 Iranian vessels believed to be preparing to lay naval mines near the strait.

Against this backdrop, energy markets remain volatile as traders continue to assess the evolving geopolitical situation and its potential impact on global Oil supply.

The International Energy Agency (IEA) has agreed to release around 400 million barrels of Oil from its members’ strategic reserves to counter soaring global energy prices.

Despite heightened geopolitical uncertainty, Gold has struggled to attract strong safe-haven demand as investors appear to favor the US Dollar for liquidity in times of market stress.

At the same time, fears that a prolonged conflict could keep Oil prices elevated are fueling concerns about global inflation, potentially complicating the Fed’s easing path. This scenario also favors the US Dollar and caps gains in the non-yielding metal.

Technical analysis: XAU/USD consolidates below $5,200

XAU/USD’s near-term bias remains mildly bullish on the 4-hour chart, with the price holding above the rising 100-period Simple Moving Average (SMA) near $5,139. However, upside momentum remains capped for now as sellers continue to defend the $5,200 level, keeping the metal confined within a short-term consolidation range.

The Relative Strength Index (RSI) has eased back to around 53 after peaking above 60, signaling cooling momentum while remaining in positive territory.

Meanwhile, the Moving Average Convergence Divergence (MACD) line remains above its signal line and in positive territory, though the green histogram bars are contracting, hinting at fading upside pressure without yet invalidating the broader upward bias.

Initial support emerges around the 100-period SMA near $5,139, and a sustained hold above this zone would keep buyers in control. A decisive break below this level could weaken the structure and expose the $5,000 psychological level, which aligns with the early-March swing low.

On the upside, $5,200 remains the immediate resistance, followed by Tuesday’s peak near $5,238. A clear break above this barrier would confirm renewed bullish momentum and could open the door for a move toward the $5,400-$5,500 region, marking the next significant resistance zone.

ING strategists Michiel Tukker and Benjamin Schroeder say Euro rates remain highly sensitive to energy dynamics, with European Central Bank hikes still priced for 2026. They argue that lower energy prices would likely remove ECB hike expectations and pull 2Y rates down, while higher-for-longer energy costs could initially lift the euro swap curve but ultimately drag longer-dated rates lower.

Energy scenarios drive ECB and curve

"Our outlook for rates from here depends on the path of energy prices. A further drop in energy prices should price out the chance of ECB hikes, pulling 2Y rates lower again. An improvement in risk sentiment could mean that 10Y rates remain sticky at current levels."

"If, on the other hand, energy prices stay higher for longer, the picture turns more complex, and much will depend on the growth outlook. A tail risk scenario whereby energy prices rise materially from here and stay high for many months could see the ECB forced to hike rates. The immediate effect of higher inflation and policy rates would push up the euro swap curve."

"But the risk is that the growth outlook turns more negative due to higher energy costs and tighter monetary policy. In response, markets could actually start pricing in significantly looser monetary policy after the initial inflation shock. Alongside deteriorating market risk sentiment, such a scenario would bring down longer-dated rates materially."

"Markets are welcoming the thought of the Middle East conflict ending soon, but oil prices tell us that we’re not there yet. We still have European Central Bank hikes priced in for 2026, and whilst equities made a push higher, the VIX continues to point towards fragile risk sentiment."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)

• EUR/GBP remains under pressure as traders reassess the ECB and BoE monetary policy outlook.
• Fading BoE rate-cut bets support the Sterling amid Oil-driven inflation concerns.
• Markets price a higher probability of an ECB rate hike even as growth risks weigh on the Euro.

EUR/GBP remains under pressure on Wednesday, with the Euro (EUR) extending its decline against the British Pound (GBP) for a fifth consecutive day as traders reassess the monetary policy outlook for the European Central Bank (ECB) and the Bank of England (BoE) amid rising concerns about an Oil-driven inflation shock linked to the ongoing US-Iran conflict.

At the time of writing, the cross is trading around 0.8628, hovering near its lowest level since February 4.

Before the US-Iran war erupted, markets were increasingly confident that the BoE would lower interest rates at next week’s monetary policy decision, with traders pricing in roughly an 80% probability of a rate cut.

However, the prospect of renewed inflationary pressures from elevated Oil prices has clouded the policy outlook, prompting policymakers to proceed cautiously and potentially delay rate cuts.

David Miles, a senior figure at the Office for Budget Responsibility (OBR), warned that energy shocks could push consumer prices higher. “If there is no change in the picture on prices from now on, we estimate something like 1% higher consumer prices by the end of the year,” Miles said.

In the meantime, the International Energy Agency (IEA) has agreed to release around 400 million barrels of Oil from its members’ strategic reserves to counter soaring global energy prices.

Meanwhile, the Euro remains on the back foot even as investors price in the possibility of a European Central Bank (ECB) rate hike, with market pricing indicating a roughly 60%-70% probability of a rate increase by June.

The divergence in policy expectations is weighing on EUR/GBP, with fading BoE rate-cut bets providing stronger support to the Pound than ECB tightening expectations are providing to the Euro.

Traders remain wary that persistently elevated Oil prices could weigh more heavily on Europe, a significant net energy importer, raising stagflation concerns amid the fragile growth outlook across the Eurozone economy.

ECB policymaker Joachim Nagel said on Wednesday that the central bank would “act decisively” if an energy price spike feeds into durably higher inflation, warning that the risk of higher inflation has increased while the economic outlook has deteriorated.

RBC Economics notes Canada’s Oil and gas sector is smaller than a decade ago but still important for GDP and exports. Higher Oil prices lift corporate profits and royalties but squeeze household purchasing power. The bank sees limited new investment, a largely neutral GDP impact, and only gradual, conditional inflation pass-through to broader Canadian prices.

Higher oil hits consumers but aids producers

"Higher energy costs curtail household spending, but other areas of the economy tied directly to energy production benefit. Corporate profits and government natural resource royalties rise alongside oil prices, and this is true for Canada and the U.S. as oil exporters."

"In Canada, the sector is smaller than a decade ago, but still accounts for 6.6% of gross domestic product and 15% of total goods exports in 2025."

"Outside of the direct effect on fuel prices, rising energy prices increase packaging expenses, and fertilizer prices among other critical business inputs across different sectors. However, these pressures take time to materialize. Oil prices must remain elevated for months rather than days or weeks to cascade through supply chains and influence business pricing decisions."

"These estimates don’t account for disinflationary pressures from reduced household demand for non-energy goods and services, which may result in a more muted inflation impact."

"Oil and gas investment in 2025 accounted for less than half of what it was in 2014 as a share of Canada’s GDP. The remaining investment in the sector is now largely devoted to maintaining existing production capacity, making it insensitive to oil price fluctuations."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)

OCBC strategists Christopher Wong and Sim Moh Siong note the Australian Dollar outperformed as global risk sentiment improved and the Reserve Bank of Australia turned more hawkish. OIS pricing now assigns a higher probability to a March rate hike, though OCBC still expects the next move in May. Elevated energy prices and Australia’s LNG and coal exports are seen as supportive for the risk‑sensitive AUD.

RBA repricing and commodities aid AUD

"The risk-sensitive AUD outperformed overnight, supported by firmer global risk sentiment and hawkish signals from the RBA."

"OIS markets added 8bp of tightening to March pricing (now 14bp) after Deputy Governor Hauser warned that inflation remains too high and insufficient policy tightening would pose a problem."

"With this shift, a March hike is now a closer call, even though we continue to see May as the more likely timing for the next RBA move."

"That said, if the risk backdrop stabilises even as oil stays elevated, terms of trade should play a larger role in FX differentiation by paving way for recovery of risk-vulnerable but not energy-vulnerable currencies like the AUD and BRL."

"Australia, as a net exporter of LNG and coal, stands to benefit indirectly from high oil prices, supporting the risk-sensitive AUD."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)

• The IEA proposes the largest coordinated release of strategic Oil reserves in history.
• Member countries unanimously agree to make 400 million barrels available to the market.
• The agency warns that the Middle East conflict is having a major impact on global energy markets.

The International Energy Agency (IEA) announced that its 32 member countries unanimously agreed to make 400 million barrels of Oil from their emergency reserves available to the market, notes Reuters. The proposed move represents the largest coordinated release of strategic Oil reserves in history.

IEA Executive Director Fatih Birol warned that the ongoing conflict in the Middle East is having a major impact on global energy markets, adding that Asia is currently the region most severely affected by disruptions in Gas supply.

According to the agency, the release would take place over a timeframe adapted to the national circumstances of each member country. The IEA also stated it will continue to closely monitor developments in global Oil and Gas markets.

These announcements come after earlier signals from several governments indicating plans to release part of their strategic reserves. Japan said it could begin releasing Oil reserves as early as March 16, while Germany also signaled it would release part of its reserves.

Market reaction

West Texas Intermediate (WTI) US Oil remains stable on Wednesday, hovering around $85.30 at the time of writing. Prices continue to fluctuate within a range between $82 and $88 since the start of the European session, with no clear direction emerging for the day.