Pound Holds Firm as Iran Sanctions Fuel US-China Tensions

The Pound to US Dollar exchange rate held steady at around $1.3635 on Tuesday, as investors weighed the potential economic consequences of the latest US sanctions on Iran and their implications for relations between Washington and Beijing.

The US sanctions, which target foreign companies and organisations that continue to conduct business with Iran, could prove particularly contentious with China, which remains one of Iran's most important buyers of crude oil. Beijing has already warned that it will take the necessary measures to protect its interests, raising the prospect of renewed tensions between the world's two largest economies.

The Pound struggled to establish a clear direction on Tuesday, with a quiet UK economic calendar leaving Sterling without a strong domestic catalyst. Lower UK government borrowing costs offered some support to the currency, although this was offset by a further reduction in expectations for Bank of England interest rate increases.