FX.co ★ Pound Recovers as Iran War Hopes Rise

The British pound inched back toward $1.33, rebounding from recent four-month lows as hopes grew for a near-term resolution to the Iran conflict. The modest uptick follows a turbulent March, during which sterling slid 1.9% against the US dollar — its steepest monthly decline since July 2025 — amid intensifying tensions in the Middle East. On Tuesday, US President Donald Trump said the United States could disengage from Iran “in two or three weeks,” with or without a deal. Even so, the crisis in the Strait of Hormuz remains unresolved, and the continued disruption of this critical shipping route is curbing oil supply and pushing prices higher. The lingering uncertainty and mounting inflationary pressures have prompted markets to reassess the Bank of England’s policy outlook, with investors now expecting fewer than two interest rate hikes in 2026, down from four anticipated in mid-March. Earlier market positioning for two pre-conflict rate cuts has also been abandoned.