The British pound climbed above $1.345 as improving risk sentiment boosted demand for risk-sensitive currencies, amid growing optimism that the US and Iran may reach an agreement to end their five-month standoff and reopen the Strait of Hormuz. Crude oil prices have declined about 10% this week after US President Donald Trump said the two countries were engaged in “very good discussions,” fueling hopes of a recovery in Middle Eastern energy supplies.
The drop in energy prices has helped ease concerns about inflation and slowing economic growth, reinforcing expectations that the Bank of England will proceed cautiously with further policy tightening. Last week’s Bank of England meeting underscored that view, as Governor Andrew Bailey played down the need for additional rate increases and emphasized that the disinflation process remains on track.
