Sterling fell slightly against the dollar on Monday, losing ground as geopolitical uncertainty in the Middle East continues to play out and questions swirl around the potential oil-price induced inflation shock headed for the UK.
As it stands, the pound is set for its weakest monthly performance against the dollar (GBPUSD=X) since October and is tracking about 1.8% lower over the past month. On Monday, the pound fell 0.1% to the $1.324 mark.
Despite this dip, sterling is holding up comparatively well amongst other major currencies. Over the past month the euro has lost almost 2.6% against the dollar.
The moves come amid shifting expectations of interest rates. The Bank of England had been expected to hold rates steady at 3.75% for 2026, however now traders are pricing in as many as four quarter-point rate hikes in the same timeframe.
The dollar index (^NYICDX), which tracks the greenback against a basket of six currencies, rose 0.4% on Monday.
President Donald Trump said this morning that a deal could be made “very quickly” with Iranian leaders.
Earlier he posted: “Big day in Iran. Many long sought after targets have been taken out and destroyed by our GREAT MILITARY, the finest and most lethal in the World.”
Prime minister Keir Starmer is meeting business leaders in Downing Street today to discuss the impact of the war on the economy.
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