The British pound was little changed, holding just above $1.34 and heading for its strongest weekly gain in nearly a month. The currency found support from a weaker US dollar, as markets grew more optimistic about a potential peace deal in the Middle East. US President Donald Trump suggested that an agreement between the US and Iran could be signed as soon as this weekend, though Tehran indicated that no final decision has yet been made.
Still, domestic economic worries tempered sentiment. Data showed the UK economy contracted by 0.1% in April, its first monthly decline since August, casting doubt on whether the Bank of England will move ahead with interest rate increases this year to address inflation.
Investors are also watching the June 18 Makerfield by-election, where Labour’s Andy Burnham—seen as a potential rival to Prime Minister Keir Starmer—could strengthen the case for more expansionary fiscal policy. Starmer is already grappling with internal party unrest and record levels of voter dissatisfaction with his handling of the economy.
