The British pound inched toward $1.33 as markets weighed developments in US-Iran diplomacy and a fresh batch of economic data. Washington granted a 10-day extension to President Trump’s deadline, pushing it to April 6, even as Tehran rejected US ultimatums and threatened retaliation. German Foreign Minister Johann Wadephul, however, confirmed ongoing indirect contacts and signaled that direct talks are planned in Pakistan. The muted reaction in financial markets points to skepticism that a breakthrough is imminent, with many viewing the delay as an opportunity for Trump to bolster troop deployments in the region.
Expectations for Bank of England policy have swung sharply this month. Traders now foresee at least two interest rate increases this year, with a third seen as possible, after previously pricing in two cuts. On the domestic front, UK retail sales slipped 0.4% in February—less than forecast—but consumer confidence fell to its lowest level in nearly a year in March, underscoring mounting concern about the conflict’s impact on inflation and economic growth.