The British pound rebounded to $1.34, erasing earlier losses, after President Trump postponed planned US strikes on Iran for five days, citing “very good and productive” talks with Tehran. The move briefly eased fears of a sharp escalation in the Middle East, coming just before a 48-hour US deadline for Iran to reopen the Strait of Hormuz.
Despite this diplomatic pause, markets continue to price in several Bank of England interest rate hikes this year—a sharp turnaround from pre-conflict expectations of two cuts—as policymakers prioritize bringing down inflation in an economy highly exposed to energy supply disruptions.
Attention this week will also focus on February CPI, retail sales, March PMI, and consumer confidence figures, all of which could further influence the central bank’s stance as it responds to the deepening crisis.
