GBP/USD tumbles on war-wary Tuesday

• GBP/USD fell back below 1.3300 on Tuesday as risk-off flows bubble over.
• Reports of Iranian missile strikes on Israel have bolstered fears of further geopolitical conflict.
• US data ahead of Friday’s NFP labor roundup did little to inspire investor confidence.

GBP/USD took a tumble on Tuesday, backsliding to its lowest bids in over a week after US ISM Purchasing Managers Index (PMI) figures misfired and broadly missed forecasts. Geopolitical tensions took center stage during the US market session, further plunging risk appetite lower following reports that Iran has fired on Israel in a clear escalation of ongoing Middle East tensions.

The economic calendar remains relatively free and clear on the Pound Sterling side, with GBP traders forced to wait until the Bank of England’s (BoE) Monetary Policy Report Hearings, due early Thursday. On the US side of things, a trickle of meaningful-in-the-aggregate yet individually meaningless economic data litters the landscape on the road to Friday’s Nonfarm Payrolls (NFP), and investors are grappling with middling releases that are routinely missing the mark.

Forex Today: The US labour market will be in the spotlight along with Fed speakers

September’s US ISM Manufacturing PMI remained stubbornly entrenched at 47.2 for a second consecutive month, entirely missing the expected uptick to 47.5. ISM Manufacturing Prices Paid also backslid more than expected over the same period, falling into contractionary territory at 48.3, down from the previous 54.0. 

Looking further into US data, JOLTS Job Openings in August rose to 8.04 million, over and above the previous period’s revised 7.7 million. Still, the widening expanse of listed job openings may not translate directly into new hires after the ISM Manufacturing Employment Index for September fell to 43.9 from the previous 46.0, entirely missing the forecast upswing to 47.0.

Investor attention has swung around to focus entirely on Middle East geopolitical tensions after early reports that Iran has executed a first missile barrage against Israel in response to Israel’s recent invasion of Lebanon. The US has declared it will retaliate on Israel’s behalf, and investors are balking at the prospect of a rapid escalation of the ongoing conflict.

GBP/USD price forecast

Cable’s backslide on Tuesday has dragged the pair back below the 1.3300 handle. Price action is now poised for a downside extension back into the 50-day Exponential Moving Average (EMA) near 1.3100. However, the way is anything but straightforward for an extended bearish push into the previous swing low just north of 1.3000.

GBP/USD daily chart