Pound Pauses Rally as Investors Eye US Sanctions on Iran
The British pound has paused its four-week rally as investors prepare for potential US sanctions on Iran and its trading partners. Sterling dipped nearly 0.1% to $1.3633 by 0956 GMT, after reaching a more than six-month high of $1.3675 on Friday.
Despite being one of the best-performing currencies among Group of Seven peers this year, the pound's strength may be short-lived. Traders expect benchmark interest rates to rise by at least 25 basis points by December, according to LSEG data, which could weigh on the currency.
Economists are divided on the need for rate hikes, with Maelle Quillevere from UBS Global Wealth Management expecting no change and predicting potential rate cuts in 2027. However, some data suggests economic productivity is improving, which could support the pound.