Pound Near $1.35 on Middle East Tensions and Mixed UK Labor Data

2026-04-21 07:36 By Joana Ferreira 1 min. read

Sterling held near $1.35, slightly below last week’s three-week peak, as political uncertainty and geopolitical risks dominated markets.

Former Foreign Office chief Olly Robbins prepared to testify over Peter Mandelson’s contested US ambassador appointment, a scandal that could threaten PM Keir Starmer if Robbins confirms Starmer was aware of failed security checks.

Meanwhile, US President Donald Trump confirmed that the two-week ceasefire between Washington and Tehran is due to expire on Wednesday evening, while US Vice President JD Vance and an Iranian delegation are expected to arrive in Pakistan later today for peace talks.

On the economic front, UK unemployment fell to 4.9% in the three months to February 2026, down from 5.2% the previous month and surpassing market expectations.

Wage growth, including bonuses, slowed to 3.8%, and to 3.6% excluding bonuses, both marginally above forecasts.

UK payrolls dropped by 11,000 in March, reflecting economic strain from the conflict.



News Stream
Pound Near $1.35 on Middle East Tensions and Mixed UK Labor Data
Sterling held near $1.35, slightly below last week’s three-week peak, as political uncertainty and geopolitical risks dominated markets. Former Foreign Office chief Olly Robbins prepared to testify over Peter Mandelson’s contested US ambassador appointment, a scandal that could threaten PM Keir Starmer if Robbins confirms Starmer was aware of failed security checks. Meanwhile, US President Donald Trump confirmed that the two-week ceasefire between Washington and Tehran is due to expire on Wednesday evening, while US Vice President JD Vance and an Iranian delegation are expected to arrive in Pakistan later today for peace talks. On the economic front, UK unemployment fell to 4.9% in the three months to February 2026, down from 5.2% the previous month and surpassing market expectations. Wage growth, including bonuses, slowed to 3.8%, and to 3.6% excluding bonuses, both marginally above forecasts. UK payrolls dropped by 11,000 in March, reflecting economic strain from the conflict.
2026-04-21
Sterling Weakens Further on Monday
The British pound slipped to around $1.3503, pressured mainly by a stronger dollar as investors moved toward safe-haven assets following renewed tensions between the US and Iran. Oil and gas prices surged after the US Navy seized an Iranian vessel, and Tehran responded by firing at ships and once again closing the Strait of Hormuz, reversing earlier hopes of reopening. Brent and WTI futures jumped about 6%, wiping out much of Friday’s decline. Traders have added roughly six basis points to expectations for Bank of England rate hikes this year, though only one increase remains fully priced in. Political uncertainty is also weighing on sentiment as scrutiny intensifies over Prime Minister Keir Starmer’s appointment of Peter Mandelson as US ambassador, with Starmer set to address parliament and further testimony expected from officials involved in the vetting process.
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Sterling Eases from 8-Week High
The British pound eased to around $1.356 as traders scaled back expectations for a Bank of England rate hike, supported by growing optimism that the Middle East conflict may be nearing an end. Policymakers have signaled no urgency to tighten policy, with Governor Andrew Bailey saying it is too early to assess the war’s impact, describing it as a major energy shock whose duration will shape inflation. Also, policymaker Megan Greene said markets were right to dial back aggressive rate hike expectations. The conflict is expected to weigh heavily on the UK economy, lifting borrowing costs and inflation while dampening growth prospects ahead of the April 30 policy meeting. Despite this, recent data showed strong momentum before the war, with GDP rising 0.5% in February. Sterling remains near an eight-week high and is up about 2.6% in April on hopes of a peace deal.
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