Sterling slid to around $1.33, its weakest level since early December 2025, as a resurgent US dollar gained from safe-haven flows amid escalating tensions in the Middle East. US President Donald Trump said US munitions stockpiles at medium and upper‑medium grades were at record levels and “virtually unlimited,” adding that wars could be sustained “forever.”
At the same time, rising energy costs following the formal closure of the Strait of Hormuz and the ongoing suspension of Qatari LNG exports risk pushing the Bank of England toward a more hawkish policy stance. Domestic politics further weighed on Sterling: Labour’s loss of Gorton and Denton, a seat it had comfortably held in the 2024 general election, has intensified uncertainty over Party leader Keir Starmer and Chancellor Rachel Reeves, amid speculation they could be replaced by ministers favouring higher fiscal spending, potentially putting additional pressure on the UK’s public finances.
