British Pound Hits 10-week High

The pound climbed to $1.36 in early May, reaching its highest level since mid-February, as investors digested the Bank of England’s latest policy decision and a fresh surge in oil prices driven by Middle East tensions. The BoE’s Monetary Policy Committee voted 8-1 to maintain Bank Rate at 3.75%, with Chief Economist Huw Pill the sole dissenter, advocating for a 25-basis-point hike. Governor Andrew Bailey characterized the decision as an “active hold,” stressing the need to monitor whether energy price shocks will persist amid a softer economic backdrop. Meanwhile, oil prices continued their upward trend, following US President Donald Trump’s insistence on maintaining a naval blockade of Iranian ports, raising concerns that the Strait of Hormuz may remain closed for the foreseeable future. Investors also turned their attention to Britain’s upcoming municipal elections on Thursday, with polls indicating a potential significant setback for Prime Minister Keir Starmer’s Labour Party.

GBPUSD increased to 1.36, the highest since February 2026. Over the past 4 weeks, British Pound US Dollar gained 2.82%, and in the last 12 months, it increased 2.43%.

The pound climbed back above $1.35 and is on track for a 2.2% monthly gain against the dollar after the Bank of England held its Bank Rate at 3.75% in an 8–1 vote, but several policymakers signaled they could still consider additional rate increases in the future. The BoE described current rates as "reasonable" and reiterated it "stands ready to act as necessary" to steer CPI inflation toward its 2% medium-term target. It also highlighted risks of second-round inflation effects and pledged to closely monitor the Middle East’s impact on global energy supply and prices. This follows the Federal Reserve’s decision to maintain rates, though its meeting revealed growing divisions among policymakers, with four officials dissenting for the first time since October 1992. Three of them opposed the Fed’s guidance suggesting future rate cuts.