The British pound retreated on Monday as the U.S. dollar faced renewed pressure from uncertainty over Washington’s sanctions policy toward Iran and evolving signals from U.S. Treasury officials.
Sterling was last trading at $1.3622, down 0.17% at 05:40 Brasília time, extending losses from Friday’s close. The euro also eased 0.12% to $1.1663, with both currencies pressured by a stronger greenback tone in early European trade. The U.S. Dollar Index (DXY) held around 98.933, consolidating within a projected range of 98.50 to 99.00 for the session, according to ING’s global markets team.
ING’s head of global markets for the UK and Central and Eastern Europe, Chris Turner, said the dollar’s recent decline may have room to extend further, though he cautioned against declaring a definitive bottom. Turner highlighted that upcoming developments—including expected sanctions announcements by U.S. Treasury Secretary Scott Bessent on Monday and heightened trade tensions—could test investor appetite for the so-called “debasement” trade against the dollar. Any escalation in tariffs would likely be viewed negatively for the U.S. currency, he noted.
The market focus remains on geopolitical risk after reports indicated new sanctions targeting Iran could be unveiled later in the day. Analysts said such measures could disrupt oil flows and heighten regional tensions, indirectly supporting safe-haven demand for the dollar in the near term.
ING maintained its year-end target for EUR/USD at $1.18, with a near-term projection of $1.17 by the end of September. The bank identified a key support zone for the pair at $1.1660 to $1.1670. Turner also downplayed expectations that Federal Reserve official Kevin Warsh would signal a major shift in monetary policy during his keynote address at the Jackson Hole symposium on Friday, describing Warsh’s policy stance as hawkish but unlikely to provide clarity on the Fed’s next move.
Ahead of these events, U.S. economic data releases are scheduled for the week, including the July core PCE reading on Wednesday and Germany’s IFO business climate survey on Tuesday. Investors will also watch for any signals from Warsh regarding inflation risks or the trajectory of U.S. interest rates.
The pound’s decline follows broader caution in currency markets, with traders balancing expectations of a softer dollar against lingering geopolitical and policy risks.
