Pound Hits Three-Week Low Against Dollar Amid Middle East Tensions

The British pound hit a three-week low against the dollar on Wednesday due to growing concerns about the ongoing conflict in the Middle East and renewed selling pressure in the gilt market.

The U.S. and Iran were at odds, with exchange of fire escalating tensions. This heightened demand for the safe-haven dollar led to sterling's decline to $1.3490-1.3510, its lowest since August 14.

UK government bond yields have also reached fresh 18-year highs, adding to finance minister John Healey's challenges ahead of his first budget on October 28.