Pound sterling held steady against the US dollar on Monday, trading at $1.359 as investors awaited the Bank of England’s policy decision later this week. The pound recovered slightly after falling to $1.3518 on Friday, its lowest in two weeks, as tensions between Israel and Iran spurred demand for the safe-haven dollar.
Markets remained cautious amid rising geopolitical risks and concerns that surging oil prices could fuel inflation, potentially leading to stagflation. “The pound is trading largely in line with its relative sensitivity to risk,” said Nick Rees, head of macro research at Monex Europe.
The euro rose 0.18 per cent to 85.26 pence against the pound, while the dollar stayed firm. Central banks, including the Bank of England, are set to meet this week. Money markets expect the BoE to hold rates at 4.25 per cent on Thursday, with a possible rate cut seen in September.
Sterling has faced headwinds from a run of weak UK data and uncertainty over future fiscal policy after a spending review by finance minister Rachel Reeves raised concerns over growth prospects and potential tax hikes.
Attribution: Amwal Al Ghad English
Subediting: M. S. Salama