FX.co ★ Sterling Slips as Middle East Tensions and Hot US Inflation Boost Dollar

The British pound weakened to $1.33 as investors sought safety in the US dollar, driven by escalating tensions in the Middle East and stronger-than-expected US producer price data ahead of key central bank meetings. On Wednesday, Israel’s strikes on Iran’s Asaluyeh refinery and the South Pars gas field, alongside evacuation warnings issued by Iran’s Revolutionary Guard for oil facilities in Saudi Arabia, the UAE, and Qatar, heightened geopolitical risks. Adding to the pressure, US producer prices jumped 0.7% in February, more than double the 0.3% forecast, while the annual rate climbed to 3.4%, its highest level in a year. Market focus now turns to the upcoming Bank of England and Federal Reserve policy decisions, where interest rates are widely expected to be left unchanged. In the UK, analysts will scrutinize the Monetary Policy Committee’s vote split, with a 7–2 or 6–3 decision to keep rates on hold viewed as the most likely outcome.