The British pound slipped below $1.33, its weakest level in nearly a month, as investors monitored tensions in the Middle East and the US dollar drew support from persistent expectations that the Federal Reserve could still raise interest rates on Wednesday. A pause in US strikes on Iran pushed oil prices lower and eased some inflation worries, but US Treasury yields fell only slightly, underscoring ongoing market caution.
Attention is now turning to the Bank of England’s policy meeting later this week, where markets widely expect rates to be left unchanged at 3.75%. Recent data have reinforced that view: annual consumer price inflation slowed to 2.6% in June, a 15‑month low and below the BoE’s forecasts. A lag in passing higher wholesale energy costs through to regulated household bills has helped keep UK inflation below that of the US and the euro area, where central banks are still expected to raise interest rates in September or October.
