Pound Drops to Two-Week Lows Amid US-Iran Tensions

2026-04-24 07:34 By Joana Ferreira 1 min. read

The British pound fell to around $1.345, its lowest level since April 10, recording a 0.4% weekly decline against the US dollar, amid renewed market pessimism as US-Iran talks stall and the Strait of Hormuz remains effectively closed.

Earlier optimism about a potential diplomatic resolution has faded following the end of a two-week ceasefire and the failure to schedule further negotiations.

Adding to the pressure, UK businesses now expect CPI inflation to hit 4% in the year ahead, up from 3.5% in March, according to the Bank of England’s Decision Maker Panel.

Meanwhile, UK retail sales rose by 0.7% last month, surpassing expectations, largely driven by motorists stocking up on petrol amid soaring prices linked to the conflict in Iran.

The data has heightened expectations that the Bank of England may raise interest rates in the near term, with investors now fully pricing in two quarter-point hikes in 2026 and assigning a 50% probability to a third increase by year-end.



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Pound Drops to Two-Week Lows Amid US-Iran Tensions
The British pound fell to around $1.345, its lowest level since April 10, recording a 0.4% weekly decline against the US dollar, amid renewed market pessimism as US-Iran talks stall and the Strait of Hormuz remains effectively closed. Earlier optimism about a potential diplomatic resolution has faded following the end of a two-week ceasefire and the failure to schedule further negotiations. Adding to the pressure, UK businesses now expect CPI inflation to hit 4% in the year ahead, up from 3.5% in March, according to the Bank of England’s Decision Maker Panel. Meanwhile, UK retail sales rose by 0.7% last month, surpassing expectations, largely driven by motorists stocking up on petrol amid soaring prices linked to the conflict in Iran. The data has heightened expectations that the Bank of England may raise interest rates in the near term, with investors now fully pricing in two quarter-point hikes in 2026 and assigning a 50% probability to a third increase by year-end.
2026-04-24
Pound Steadies Near Two-Week Low on US-Iran Tensions, UK PMI
The British pound recovered from early losses to stabilize around $1.35 against the US dollar but remained at its weakest level since April 10. Investors balanced escalating US-Iran tensions, with no progress in peace talks and both nations deadlocked over the Strait of Hormuz, against stronger-than-expected UK PMI data. President Trump extended the April 7 truce indefinitely, awaiting a new Iranian proposal, though Tehran has signaled no immediate plans for negotiations. On the economic front, April’s PMI showed UK business activity rebounding after March’s war-induced slowdown, but the uptick partly reflects firms stockpiling supplies amid fears of price spikes and shortages. Politically, Keir Starmer’s ex-chief of staff, Morgan McSweeney, faces a Foreign Affairs Committee hearing next Tuesday over vetting allegations tied to Peter Mandelson, while Labour MP Jonathan Brash called Starmer’s resignation unavoidable due to the scandal’s fallout.
2026-04-23
Pound Weakens Slightly on US-Iran Standoff
The British pound slipped below $1.35 against the US dollar today, reflecting market unease as tensions between the US and Iran persist. With no progress in peace talks, both countries remain at odds over control of the Strait of Hormuz. US President Trump confirmed that the truce agreed on April 7 will stay in place indefinitely, awaiting a new proposal from Iran, though Iranian officials have indicated no immediate intention to participate in further negotiations. On the UK political front, Morgan McSweeney, former chief of staff to Prime Minister Keir Starmer, is scheduled to appear before the Foreign Affairs Select Committee next Tuesday. The hearing follows claims by ex-Foreign Office chief Olly Robbins that Downing Street questioned the need for vetting Peter Mandelson. Meanwhile, Labour MP Jonathan Brash, who won Mandelson’s former Hartlepool seat in 2024, argued that the ongoing scandal has paralyzed the government, making Starmer’s resignation inevitable.
2026-04-23