GBP/USD falls as Trump reinstates Iran naval blockade

The British pound slid against the U.S. dollar on Tuesday as markets digested President Donald Trump's announcement that the United States would reinstate its naval blockade of Iran in the Strait of Hormuz, escalating a conflict that has rattled global energy markets and weighed on risk-sensitive currencies.

GBP/USD dropped after being rejected near the 1.3400 level, with the pair trading around 1.335 as geopolitical risk premiums bolstered demand for the dollar. The move came after the pair failed to hold above its 200-day exponential moving average, a technical level that had acted as resistance in recent sessions.mtfxgroup

Trump Restarts Blockade, Demands 20% Toll

Trump announced on Sunday that the U.S. would restart its naval blockade targeting Iranian ships and those doing business with Tehran in the strait. He also floated a 20 percent fee on all cargo moving through the critical waterway, according to CNBC. "The Hormuz Strait is OPEN, and will remain OPEN, with or without Iran," Trump wrote on social media, adding that the U.S. would serve as "guardian" of the passage.aljazeera+3

The Pentagon's Central Command confirmed the blockade would take effect on Monday at 20:00 GMT. The announcement followed a weekend of U.S.-Iran military exchanges, with Trump formally notifying Congress that hostilities with Iran had resumed.wikipedia+1

Oil Surges, Risk Currencies Under Pressure

Oil prices jumped sharply. Brent crude rose above $80 a barrel on Sunday evening as markets reacted to the blockade announcement, and by early Tuesday U.S. crude was trading above $80 per barrel, up more than 3 percent from the prior session. Fortune reported Brent at nearly $87 a barrel in early Tuesday trading.fortune+2

The spike in energy costs added to concerns about persistent inflation globally and complicated the outlook for central banks, including the Bank of England, which faces pressure from both slowing growth and elevated price pressures. Higher oil prices tend to support the dollar as a safe-haven currency while weighing on sterling, which is more sensitive to shifts in global risk appetite.

Broader Context

The 2026 Strait of Hormuz crisis has seen multiple rounds of escalation since early in the year, when experts warned that U.S. military engagement could lead Iran to obstruct the passage through which roughly a third of the world's seaborne crude oil transits. A brief reopening in May offered temporary relief to markets, but the latest reinstatement of the blockade marks a new chapter in the standoff.CNBC+1

Analysts warn that a prolonged disruption could fuel a 1970s-style energy shock, with oil markets already pricing in elevated supply risks heading into the summer.cnbc.com