Pound Holds Firm on Easing Inflation Outlook

2026-08-06 08:31 By Agna Gabriel 1 min. read

The British pound held above $1.345 as investors remained cautious over the outcome of Iran-Oman talks and whether they will lead to the restoration of energy flows through the Strait of Hormuz.

Iran said it had reached an agreement with Oman on a proposed shipping route through the strategic waterway, raising hopes of improved oil supply and lower energy prices.

However, a broader US-Iran agreement remains uncertain, with President Donald Trump saying he would “see what happens” in ongoing negotiations.

The prospect of lower energy costs has eased concerns over inflation and slowing economic growth, reinforcing expectations that the Bank of England will maintain a gradual approach to monetary policy.

That view was strengthened by last week’s Bank of England meeting, where policymakers left rates unchanged and Governor Andrew Bailey downplayed the need for further tightening, arguing that the disinflation process remains on track despite lingering external uncertainties.



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Pound Holds Firm on Easing Inflation Outlook
The British pound held above $1.345 as investors remained cautious over the outcome of Iran-Oman talks and whether they will lead to the restoration of energy flows through the Strait of Hormuz. Iran said it had reached an agreement with Oman on a proposed shipping route through the strategic waterway, raising hopes of improved oil supply and lower energy prices. However, a broader US-Iran agreement remains uncertain, with President Donald Trump saying he would “see what happens” in ongoing negotiations. The prospect of lower energy costs has eased concerns over inflation and slowing economic growth, reinforcing expectations that the Bank of England will maintain a gradual approach to monetary policy. That view was strengthened by last week’s Bank of England meeting, where policymakers left rates unchanged and Governor Andrew Bailey downplayed the need for further tightening, arguing that the disinflation process remains on track despite lingering external uncertainties.
2026-08-06
Pound Rises as Easing Middle East Tensions Boost Risk Appetite
The British pound rose above $1.345 as improving risk sentiment supported demand for risk-sensitive currencies amid growing optimism that the US and Iran could reach a deal to end their five-month conflict and reopen the Strait of Hormuz. Crude oil prices have fallen about 10% this week after US President Donald Trump said the two countries were engaged in "very good discussions," raising hopes of a recovery in Middle Eastern energy supplies. Lower energy prices have eased concerns over inflation and weaker economic growth, reinforcing expectations that the Bank of England will take a gradual approach to policy tightening. Last week's Bank of England meeting strengthened that view, with Governor Andrew Bailey downplaying the need for further rate hikes and saying the disinflation process remains on track.
2026-08-05
Pound Holds Above $1.34 as Geopolitical Tensions Ease
The British pound held above $1.34 as improving risk sentiment supported demand for riskier assets amid signs of easing tensions between the US and Iran. Qatar said mediators were making progress in negotiations, while US Treasury Secretary Scott Bessent said a deal to reopen the Strait of Hormuz could be be reached as early as Tuesday or Wednesday. Meanwhile, last week's Bank of England meeting reinforced expectations that policymakers are in no rush to tighten monetary policy, prompting markets to pare bets on interest rate hikes in 2026. The BoE voted 6-3 to keep rates unchanged, with three members backing a hike versus expectations for a 7-2 split. However, Governor Andrew Bailey played down the prospect of imminent tightening, saying the disinflation process remains on track, while some policymakers suggested rate cuts could return to the agenda if Middle East tensions continue to ease.
2026-08-04