The British pound held just above $1.34 as investors remained cautious amid escalating tensions between Iran and the United States and concern that a prolonged conflict could keep inflation elevated. Iran claimed it had targeted a US command ship in the Gulf of Oman, while the Republican-controlled House of Representatives voted to halt US military action against Iran, putting it at odds with President Donald Trump. Although the measure is unlikely to prevent further attacks, it marks a rare rebuke of his administration.
Meanwhile, Israel and Lebanon agreed to a conditional ceasefire, with Prime Minister Benjamin Netanyahu warning that additional strikes remained possible. On the monetary policy front, markets are now pricing in nearly two Bank of England rate hikes this year, with the first increase widely expected in September, as policymakers strive to rein in rising inflation while managing the first signs of a cooling labour market.
