FX.co ★ Sterling Recovers from Three-Month Low

The British pound stabilized above $1.33, attempting to rebound from a sharp selloff that drove sterling to a three-month low. Investors remain focused on escalating tensions in the Middle East and how they might influence the Bank of England’s policy stance, with the central bank set to announce its decision later this week. US President Donald Trump indicated that military operations in Iran would continue beyond this week, while Israeli officials warned on Monday that the conflict could persist for “several more long weeks.” The resulting jump in energy prices has led traders to price in roughly a 50% chance of a Bank of England rate hike in November, a marked shift from early March, when markets were expecting two rate cuts this year. For this week’s meeting, attention will center on the distribution of votes among policymakers, with consensus pointing to a 7–2 or 6–3 decision in favor of keeping rates on hold.