Hormuz Tensions Weigh on Pound as UK Inflation Cools

The British pound has steadied near the 1.3500 level against the US dollar as of early trading, supported by a lower-than-expected UK inflation reading but constrained by rising tensions in the Strait of Hormuz.

UK consumer price inflation eased more than analysts had forecast, with the annual CPI rate coming in at X%, down from Y% in the previous month. The softer inflation print has led markets to scale back expectations of further aggressive rate hikes, offering a modest tailwind for the currency.

However, the Bank of England remains cautious, noting that underlying price pressures remain elevated, particularly in the services sector. This has limited the pound's upside, as traders weigh the risk of a broader conflict in the Middle East and potential supply disruptions to global oil shipments.