The British pound edged up to $1.346 in the first trading session of June, staging a modest rebound after losing more than 1% against the US dollar over the previous month. Markets remain focused on developments in the Middle East, where negotiations between the US and Iran to prolong the ceasefire and reopen the Strait of Hormuz are making uncertain progress. US President Trump has yet to comment publicly following a White House meeting held on Friday.
Geopolitical tensions escalated after Israel broadened its ground offensive in Lebanon, breaching the truce and pushing oil prices higher. The renewed volatility in energy markets has prompted investors to slightly increase their expectations for additional Bank of England interest rate hikes later this year.
On the domestic front, UK house prices fell 0.6% in May, a steeper decline than the 0.1% drop forecast by economists and the largest monthly fall since June 2025. Nationwide attributed the weakness to deteriorating consumer confidence and the impact of the Iran conflict on energy costs.
