FX.co ★ Sterling Holds Near $1.34 Amid Geopolitical Tensions

The British pound held just below $1.34 as investors tracked an increasingly fragile ceasefire between the United States and Iran. Geopolitical tensions escalated after Israel carried out its heaviest airstrikes yet on Lebanon, resulting in hundreds of casualties and prompting Tehran to threaten retaliation. Iran also ruled out any further peace talks with Washington, while the continued blockade of the Strait of Hormuz added to the strain on the already tenuous truce, pushing oil prices higher. Heightening uncertainty, US President Donald Trump stated that American troops would remain stationed near Iran until a “real agreement” is reached. Against this backdrop, financial markets are now pricing in a higher probability of additional Bank of England interest rate hikes, with at least one increase expected by the end of 2026.