Sterling Steadies Amid Oil Price Drop and Fiscal Policy Hopes

The pound sterling (GBP) has steadied against the US dollar (USD) on Monday after oil prices dropped, easing inflation fears and moderating expectations for further tightening by the Bank of England (BoE).

Oil prices have plummeted to $87.84 per barrel, a decline of 9% from their recent high, following paused U.S.-Iran hostilities.

The drop in oil prices has led to a decrease in inflation concerns, which could result in the BoE maintaining its current interest rate of 3.75% at its upcoming policy meeting on Thursday.

Expectations are that the two-year gilt yields will remain low, down by 6 basis points to 4.362%, outperforming equivalent U.S. and German bonds.