FX.co ★ Sterling Weakens to Over 4-Week Low

The British pound declined to $1.339, marking its lowest point in over a month, as escalating geopolitical tensions prompted investors to favor the US dollar. This resulted in the dollar outperforming all G10 currencies, especially after the US executed strikes on Iran, further intensifying the demand for safe-haven assets. On the domestic front, UK economic indicators provided some reassurance; S&P Global’s preliminary composite PMI for June rose to 50.7, surpassing expectations slightly. While the manufacturing sector continued its contraction, it was not as significant as forecasted, and the services sector aligned with projections. Nonetheless, the pound remained under pressure after the Bank of England’s recent decision to maintain steady interest rates. The decision was unexpectedly dovish, evidenced by three out of nine Monetary Policy Committee members advocating for a rate cut, contrary to the anticipated 7–2 vote split. The Bank of England attributed this stance to enduring inflation and geopolitical uncertainties, cautioning about "two-sided risks" and projecting inflation to remain high until 2025.