The pound has lost ground to the US dollar following a major escalation in geopolitical tensions in the Middle East. US airstrikes on Baghdad airport killed a senior Iranian military leader, furthering the strain on Middle Eastern relations. Investor sentiment turned risk-off and returned to the USD as a safe-haven.
A spike for crude oil and gold prices pushed the US dollar upwards against the pound and created further volatility for GBP/USD. This also wasn’t helped by poor UK PMI data for manufacturing, which helped signal a bad start to the year for GBP.