FX.co ★ Sterling Strengthens from 3-Month Low

The British pound rose to $1.346, rebounding from a three-month low of $1.335 reached on March 3, as investors moved out of the US dollar and back into other major currencies on hopes that the conflict will prove less inflationary than previously feared. Market sentiment improved as oil prices retreated, helped by efforts from US President Donald Trump to calm investors. Trump suggested the conflict could be resolved quickly and announced that the US Navy would escort tankers through the Strait of Hormuz to protect key shipping lanes. Crude prices fell nearly 6%, and European natural gas prices also declined. At the same time, expectations for Bank of England policy have shifted, with traders once again leaning toward the likelihood of interest rate cuts. Markets are now assigning roughly a 50% probability to a rate reduction by September, a sharp reversal from the previous session, when little change in policy was anticipated and a rate hike had briefly been priced in earlier in the day.