Pound Retreats as US-Iran Tensions Weigh

2026-05-26 07:38 By Joana Ferreira 1 min. read

The pound slipped to $1.347, as escalating US-Iran tensions reignited inflation concerns and dimmed the global growth outlook.

On Monday, Iran reported explosions in the southern port city of Bandar Abbas, while the US confirmed it had conducted "self-defense" strikes targeting Iranian missile launch sites and vessels attempting to deploy naval mines.

Earlier that day, US President Donald Trump stated that a memorandum of understanding between the two nations was "largely negotiated" and would reopen the critical Strait of Hormuz shipping lane.

Meanwhile, UK economic data revealed contractions in private sector activity during May, alongside cooling inflation and a softer labor market, leading investors to trim expectations for Bank of England rate hikes.

Focus now shifts to forthcoming speeches from BoE policymakers for monetary policy direction, as well as political developments surrounding Prime Minister Keir Starmer after Labour’s regional election defeats this month.



News Stream
Pound Retreats as US-Iran Tensions Weigh
The pound slipped to $1.347, as escalating US-Iran tensions reignited inflation concerns and dimmed the global growth outlook. On Monday, Iran reported explosions in the southern port city of Bandar Abbas, while the US confirmed it had conducted "self-defense" strikes targeting Iranian missile launch sites and vessels attempting to deploy naval mines. Earlier that day, US President Donald Trump stated that a memorandum of understanding between the two nations was "largely negotiated" and would reopen the critical Strait of Hormuz shipping lane. Meanwhile, UK economic data revealed contractions in private sector activity during May, alongside cooling inflation and a softer labor market, leading investors to trim expectations for Bank of England rate hikes. Focus now shifts to forthcoming speeches from BoE policymakers for monetary policy direction, as well as political developments surrounding Prime Minister Keir Starmer after Labour’s regional election defeats this month.
2026-05-26
Sterling Gains on Iran Deal Optimism
The pound climbed toward $1.35, reaching its highest level since May 14, as investors welcomed progress in US-Iran negotiations and scaled back Bank of England rate hike expectations following a series of weak UK economic releases. Brent crude fell below $100 per barrel after US President Donald Trump stated that a memorandum of understanding between the two nations had been "largely negotiated" and would reopen the Strait of Hormuz. The data showing April retail sales declining 1.3%, softer inflation, an unexpectedly cooling labor market, and May PMI signaling the first private sector contraction in a year all contributed to the shift in rate expectations. Investors now await speeches from BoE policymakers later this week for monetary policy signals, as well as political developments surrounding Prime Minister Keir Starmer after Labour's regional election defeats this month.
2026-05-25
Sterling Stuck Near $1.34 as UK Data Sours and Iran Talks Drag On
The pound traded little changed just above $1.34 by the end of a week overshadowed by poor UK economic releases and persistent uncertainty in US-Iran negotiations. April retail sales slumped 1.3%, nearly double the 0.6% decline forecast, led by a sharp fall in fuel sales amid rising prices, while the UK’s budget deficit ballooned to £24.3 billion in April, topping the £20.9 billion estimate and marking the highest April shortfall since 2020. The data followed earlier reports of softer-than-expected April inflation, an unexpected cooling in the labor market, and May PMI readings signaling a contraction in private sector activity, prompting traders to trim bets on Bank of England rate increases. Meanwhile, US Senator Marco Rubio cited "some good signs" in Iran talks, though Tehran’s uranium stockpile and control over the Strait of Hormuz remain key sticking points.
2026-05-22