The pound rose against the dollar on Tuesday as hopes for a de-escalation in the Middle East conflict pushed oil prices lower and eased inflation concerns for Britain’s import-dependent economy.
Sterling GBP=D3 gained 0.1%, reaching $1.3454 against the dollar. It was slightly lower versus the euro at 86.52 pence. EURGBP=
“The UK fundamentals are pretty poor, but in these situations, you tend to see that a shakeout is followed by a recovery as investors rebalance,” said Nick Kennedy, FX strategist at Lloyds.
The currency has lost 0.3% against the dollar so far this month.
Investors remain on edge given the far-reaching implications of the ongoing conflict involving the U.S., Israel, and Iran, but are scanning for any signs of relief.
However, conflicting signals from Washington and Tehran have led analysts to advise caution.
While U.S. President Donald Trump hinted that the war could end sooner than initially expected, Iran’s Revolutionary Guards have vowed to block oil shipments through the Strait of Hormuz unless U.S. and Israeli attacks cease.
Standard Chartered and Morgan Stanley now expect the Bank of England to cut interest rates in the second quarter, delaying earlier forecasts.
Elsewhere, the euro EUR=EBS rose slightly to $1.1639 against the dollar, while the yen JPY=EBS remained flat at 157.77 per dollar.
(Reuters)