Finance
Sterling Holds Steady as BoE in Focus
Published by Global Banking & Finance Review®
Posted on March 19, 2026
2 min readLast updated: March 19, 2026
Quick Summary
Sterling remained steady as the Bank of England prepared to hold rates amid slowing wage growth—the weakest in years—and rising global energy risks from the Iran war, tempering expectations of a near-term rate cut.
Sterling Steady as Bank of England Maintains Interest Rates Amid Iran Tensions
By Sophie Kiderlin
Bank of England Decision and Market Reactions
LONDON, March 19 (Reuters) - Sterling was steady on Thursday as markets focused on the Bank of England's interest rate decision later in the day, with investors looking out for any clues from policymakers about the impact of the Iran war.
UK Wage Growth and Employment Trends
Data published on Thursday meanwhile showed that British wages, excluding bonuses, rose at their slowest pace since late 2020 in the three months to January. The figures also suggested a weakening in employment might have bottomed out.
Labour Market Analysis
“With unemployment staying steady at 5.2% and a rare gain in payrolls employment, this report paints a mildly more positive picture of the labour market. And with wage growth softer again, in normal times this would have been a relatively reassuring report for the Bank of England. But the report feels stale in light of the Iran conflict, and the inflation risks stemming from the large spike in energy price," Luke Bartholomew, deputy chief economist at Aberdeen, said in a note.
Sterling and Currency Market Movements
The pound was last little changed against the dollar at $1.3259, having hit its lowest level since early December last week. The euro was also last roughly unchanged against sterling at 86.37 pence.
Interest Rate Expectations Amid Global Uncertainty
The BoE is widely expected to leave rates unchanged at this meeting. Markets had been pricing in a rate cut until recently, however the oil price spike brought on by the Iran war has created widespread uncertainty, stoking inflation fears and leading to shifts in policy expectations.
Policy Outlook from Economists
"While today’s Bank of England meeting had once looked like the likely point of the next rate cut, instead policy is set to be kept on hold today as policymakers give themselves more time to see how the conflict plays out," Bartholomew said.
Global Central Bank Decisions
The BoE's decision is one of many in a short period, with the Federal Reserve and the Bank of Japan both having left rates unchanged - as expected - and the ECB also being set to announce its latest policy decision Thursday.
(Reporting by Sophie Kiderlin, editing by Alexandra Hudson)
Key Takeaways
- •Sterling was stable at about $1.3259 and ~86.4p per euro ahead of today’s Bank of England decision.
- •Wage growth excluding bonuses eased to its slowest pace since late 2021/2022, reflecting a softening labour market.
- •Markets shifted from expecting a BoE rate cut toward a hold, driven by inflation risks from the Iran war and surging oil prices.
Frequently Asked Questions about Sterling holds steady as BoE in focus
1Why did the Bank of England keep interest rates unchanged?
The Bank of England kept rates unchanged to observe the impact of the Iran conflict and associated inflation risks before making policy changes.
2How has the Iran war affected financial markets?
The Iran war has increased energy prices, stoked inflation fears, and caused uncertainty in financial markets, affecting policy expectations in the UK.
3What recent trends were seen in UK wages and employment?
UK wages, excluding bonuses, rose at their slowest pace since 2020, while employment appears to have stabilized with steady unemployment and a gain in payrolls.
4How has sterling performed against major currencies?
Sterling has remained steady against the dollar and euro, despite recently hitting its lowest level since early December.
5What are other major central banks doing with interest rates?
The Federal Reserve and Bank of Japan have both left their rates unchanged, while the ECB is also expected to announce its policy decision.
