Pound Holds Near Three-Month Low

GBPUSD decreased to 1.33, the lowest since December 2025. Over the past 4 weeks, British Pound US Dollar lost 2.77%, and in the last 12 months, it increased 2.49%.

The British pound extended its losses, falling below $1.33 and reaching its weakest level since early December, as investors reacted to disappointing UK economic data and growing geopolitical tensions that strengthened the US dollar. Data from the ONS showed that UK GDP was flat in January, missing market expectations of 0.2% monthly growth. The services sector recorded no growth, while production output declined by 0.1%. Meanwhile, escalating tensions involving the US, Israel, and Iran pushed oil prices above $100 per barrel as the conflict showed no signs of easing. The surge in energy prices has heightened concerns about renewed inflationary pressures in the UK. Despite the weak growth outlook, rising inflation risks mean the Bank of England is now expected to keep interest rates on hold for longer, with the possibility of further tightening. Markets currently price in roughly an 80% probability of a 25-basis-point rate hike by the end of the year.

The British pound slipped to $1.338, hovering near the three-month lows hit last week, as ongoing uncertainty over the Middle East conflict bolstered the US dollar and raised concerns about rising inflation in the UK. Oil prices extended their rally, briefly topping $100 per barrel after Iran stepped up attacks on oil and transportation infrastructure across the region. The International Energy Agency’s plan to release 400 million barrels from strategic reserves offered little immediate relief, as the supply could take weeks or months to reach the market. Money markets are now pricing in a greater than 50% chance of a 25-basis-point rate hike by the Bank of England in December, a shift from expectations of no change just this past Wednesday. Investors are also looking ahead to upcoming UK economic data, with monthly GDP figures due on Friday.