Sterling Holds Firm Amid Global Uncertainty
Sterling is holding steady around $1.3510 as investors weigh upcoming UK and US data against a backdrop of elevated UK government bond yields and fresh Middle East tensions.
The pound has maintained its strength despite the US dollar firming on geopolitical jitters, with traders waiting for clearer signals from the Federal Reserve's next move.
UK borrowing costs remain high, with gilt yields near multi-decade highs due to investors demanding extra compensation for uncertainty around inflation and government finances.
This is significant because higher yields can support a currency, but also reflect anxiety about fiscal policy. Analysts told Reuters that UK data hasn't been weak enough to rule out further Bank of England rate hikes, while higher oil prices keep inflation worries alive.