Sterling Slumps Amid US Sanctions Concerns

The British pound's four-week rally has come to an end as investors grow cautious about potential US sanctions on Iran. Sterling dipped by nearly 0.1% to $1.3633 against the dollar, after reaching a six-month high of $1.3675 on Friday.

Market expectations suggest that the Bank of England will hike interest rates towards the end of the year, which has contributed to sterling's strength this year. However, traders believe there is a possibility of a 25 basis point rate hike by December, despite most economists anticipating no change.

Economists at UBS Global Wealth Management expect rate cuts could potentially resume in 2027, as they believe that the recent combination of resilient growth and easing domestic inflation pressures suggests no need to tighten monetary policy this year.