FX.co ★ Sterling Slumps to $1.33 as Hormuz Deadline Looms

The British pound fell further to $1.33 as investors sought safety in the US dollar amid fears of an escalating conflict in the Middle East. A 48-hour US deadline for Iran to reopen the Strait of Hormuz expires today, with President Trump warning of strikes on Iranian power facilities if Tehran does not comply. Iran’s pledge to retaliate by targeting Gulf energy and desalination infrastructure has pushed Brent crude above $110 per barrel, intensifying worries about the UK’s vulnerability to disruptions in imported energy. Financial markets now expect four Bank of England rate hikes in 2026—an abrupt reversal from pre-war forecasts that had pointed to two cuts—as policymakers shift their focus firmly toward containing inflation. Attention this week turns to February CPI, retail sales, March PMI, and consumer confidence figures, all of which could further influence the central bank’s response to the worsening crisis.