Sterling Slumps Against Dollar Amid US-Iran Tensions

The British pound weakened against a basket of global currencies in European trading on Thursday, extending its decline against the US dollar for a second consecutive day and moving further away from a four-week high. The sterling retreated as investors focused on the US dollar as a safe haven due to persistent disagreements between the US and Iran over the Strait of Hormuz.

Rising oil prices are renewing inflationary pressures on Bank of England policymakers, increasing expectations for a UK interest rate hike in September. Investors are awaiting UK economic growth data later today to reassess those expectations.

The US Dollar Index rose 0.1% on Thursday, extending its gains for a fourth consecutive session and reflecting continued strength in the US currency against a basket of major and minor currencies.