Finance
Sterling Edges up but Heads for Weekly Loss as Iran Tensions Overshadow UK Data
Published by Global Banking & Finance Review®
Posted on April 24, 2026
3 min readLast updated: April 24, 2026
Add as preferred source on GoogleQuick Summary
Sterling edged up to $1.348 on Friday but is set for a weekly decline amid heightened US‑Iran tensions. Strong UK March retail data held little sway as inflation and consumer morale remain strained amid growing Middle East geopolitical risks. Markets now foresee fewer BoE rate hikes, with the next d
Sterling Rises but Faces Weekly Loss as Iran Tensions Overshadow UK Data
Market Overview and Key Drivers
By Lucy Raitano
Sterling's Performance Against Major Currencies
LONDON, April 24 (Reuters) - The British pound rose slightly against the dollar on Friday but was headed for a weekly loss, as traders kept an eye on stalled peace negotiations between the U.S. and Iran while some strong UK retail data barely moved the needle.
Sterling was 0.1% higher versus the dollar at $1.348, as broader currency markets traded largely range-bound.
Against the euro, the pound fell 0.1% to 86.69.
UK Retail Sales and Consumer Sentiment
Impact of Retail Sales Data
UK retail sales for March rose more than expected, official data showed. British motorists worried about fuel price increases rushed to the pumps immediately after the start of the Iran war, pushing up total sales volumes for the country's retail sector.
"There had been concerns that the uncertainty over the impact of the situation in the Middle East on household finances might dampen consumers' appetite to spend, but even the figures for March were fairly robust," Investec economists wrote in a note.
Consumer Morale and Inflation Concerns
However the data comes hot on the heels of a survey that on Thursday showed British consumer morale slid this month to its lowest since October 2023 as households ramped up their expectations for price rises.
The war in the Middle East has caused a global energy price spike, fanning concern around inflation and growth.
Bank of England Policy Outlook
Interest Rate Expectations
Traders are betting on at least one 25-basis-point rate increase from the Bank of England this year, a marked reversal from before the war when they had been eyeing two.
The BoE will deliver its next policy decision on Thursday, with markets placing an 83% bet that the central bank will hold rates at 3.75%.
Impact of Geopolitical Tensions on Sterling
The pound shed 1.9% in March as the Middle East conflict weighed on markets with the closure of the Strait of Hormuz - critical for the flow of energy - dealing a blow to the outlook for the British economy.
It has now recouped the losses in April and is on track for its biggest monthly rise since August.
Global Market Risks
Bank of England's Global Outlook
Elsewhere, the BoE expects stock markets around the world to fall because current share prices do not fully reflect the many risks facing the global economy, Deputy Governor Sarah Breeden said in an interview with the BBC on Friday.
Reporting
(Reporting by Lucy Raitano in London; Editing by Andrew Heavens)
Key Takeaways
- •U.S.–Iran conflict continues to weigh on sterling’s outlook, overshadowing the impact of resilient UK retail sales in March. (investing.com)
- •March retail sales surprised with a 0.7% m/m rise, led partly by fuel purchasing—drivers rushed to fill up amid rising oil prices. (investing.com)
- •Despite the retail uptick, consumer confidence remains low and inflationary pressures persist, prompting traders to scale back expectations for Bank of England rate hikes. (krro.com)
References
Frequently Asked Questions about Sterling edges up but heads for weekly loss as Iran tensions overshadow UK data
1Why is the British pound facing a weekly loss?
The pound is facing a weekly loss due to concerns over tensions between the U.S. and Iran, which have impacted global markets and overshadowed positive UK retail sales data.
2How have Iran tensions affected UK markets?
Tensions in the Middle East have caused global energy prices to spike, fueling inflation and dampening growth prospects in the UK.
3What impact did UK retail sales have on the pound?
Although UK retail sales for March rose more than expected, the robust data had minimal impact on the pound due to broader geopolitical concerns.
4What is the Bank of England expected to do at its next policy meeting?
Markets expect the Bank of England to hold interest rates at 3.75% at its upcoming policy decision.
5How has the war in the Middle East influenced consumer morale in the UK?
Consumer morale in the UK has dropped to its lowest since October 2023 as expectations for price rises have increased due to the war in the Middle East.
