Pound Edges Higher Amid US-Iran Deal Hopes

2026-05-28 14:51 By Joana Ferreira 1 min. read

The pound pared earlier losses to trade slightly higher above $1.34, as investors weighed developments in Middle East diplomacy alongside shifting expectations for UK interest rates.

According to Axios, US and Iranian negotiators have reportedly agreed on a 60-day memorandum of understanding to extend a ceasefire and begin negotiations over Iran’s nuclear program, though final approval from President Trump remains pending.

Despite the tentative progress, geopolitical tensions persist, with continued US–Iran exchanges and renewed Israeli strikes on Hezbollah targets in Lebanon despite a fragile ceasefire.

The resulting decline in oil prices helped ease inflation concerns, prompting investors to slightly scale back expectations for further Bank of England rate hikes.

Sentiment was also influenced by recent UK data pointing to a cooling labor market, softer-than-expected inflation, and signs of moderating economic activity.



News Stream
Pound Edges Higher Amid US-Iran Deal Hopes
The pound pared earlier losses to trade slightly higher above $1.34, as investors weighed developments in Middle East diplomacy alongside shifting expectations for UK interest rates. According to Axios, US and Iranian negotiators have reportedly agreed on a 60-day memorandum of understanding to extend a ceasefire and begin negotiations over Iran’s nuclear program, though final approval from President Trump remains pending. Despite the tentative progress, geopolitical tensions persist, with continued US–Iran exchanges and renewed Israeli strikes on Hezbollah targets in Lebanon despite a fragile ceasefire. The resulting decline in oil prices helped ease inflation concerns, prompting investors to slightly scale back expectations for further Bank of England rate hikes. Sentiment was also influenced by recent UK data pointing to a cooling labor market, softer-than-expected inflation, and signs of moderating economic activity.
2026-05-28
Pound Slips After US Strikes on Iran
The pound slipped to $1.34 as Middle East tensions flared, with renewed US-Iran conflict driving oil prices up and exposing the fragility of recent peace efforts. Brent crude rose to nearly $97 a barrel after the US conducted airstrikes on an Iranian military site and imposed sanctions to block Iran’s revenue from ships in the Strait of Hormuz. A US official described the strikes as defensive and reaffirmed the country’s commitment to the month-old ceasefire. At the same time, Kuwait reported countering hostile drone and missile threats. The heightened tensions in the region prompted traders to boost bets on Bank of England rate hikes, despite a series of recent weak data releases pointing to sluggish economic activity in the UK.
2026-05-28
Pound Little-Changed Amid Middle East Optimism
The pound held steady at $1.344 as investors awaited Middle East developments amid optimism over a potential US-Iran peace deal and diminishing expectations for Bank of England rate hikes. Investors remain focused on the region, heartened by the recent lack of negative signals from both sides and lingering hopes that an agreement to ease tensions and reopen the Strait of Hormuz remains possible despite recent strikes. Traders have trimmed their bets on BoE rate hikes, now expecting about 40 basis points of tightening by year-end, with a roughly 50% chance of a hike next month. Attention now turns to upcoming BoE policymaker speeches for monetary policy signals and political developments around Prime Minister Keir Starmer following Labour’s regional election setbacks.
2026-05-27