Pound Takes a Hit on Middle East Tensions, US Payrolls Loom

The British pound experienced a slight decline against both the euro and US dollar on Friday as markets reacted to ongoing tensions in the Middle East and awaited the release of the closely watched US nonfarm payrolls report.

Against the dollar, sterling fell by 0.1% to USD1.3438, while it was similarly lower at 85.76 pence against the euro.

Investors were cautious about diplomatic efforts to end the Iran war and reopen the crucial Strait of Hormuz, particularly as tensions flared up again in the Middle East following an attack by Yemen's Houthis on southern Saudi Arabia that wounded 11 civilians on Thursday.

Nick Rees, head of macro research at Monex Europe, noted that 'the next big sterling catalyst is actually that everything else in the world calms down.'