The British pound climbed above $1.34, its highest level since early June, as investors moved back into riskier assets following a preliminary agreement between the US and Iran to end their three-month conflict. The framework deal, which includes lifting the US blockade and reopening the Strait of Hormuz, is expected to be signed in Switzerland on Friday, although key issues surrounding Iran’s nuclear program remain unresolved. At the same time, Israel’s National Security Minister Itamar Ben-Gvir has declared that the agreement does not bind Israel.
On the monetary policy front, Thursday’s Bank of England decision is expected to be closely contested. Policymakers are weighing persistent inflationary pressures against a weakening labor market and sluggish economic growth. In response, traders have scaled back their expectations and are now pricing in only one additional rate hike from the Bank this year.
