Sterling rises versus dollar as market sentiment brightens

Sterling Rises Against Dollar as Market Sentiment and Oil Prices Shift

Market Movements and Economic Outlook

By Sophie Kiderlin

Sterling's Performance Against Major Currencies

LONDON, Nov 9 (Reuters) - The pound rose against the dollar on Monday, reversing most of Friday's decline, as the concerns over AI stocks that gave the dollar a boost at the end of last week eased and oil prices fell.

The somewhat more positive market backdrop meant demand for safe-haven assets like the dollar cooled on Monday. Sterling was last up just over 0.5% at $1.3421, having fallen more than 0.7% on Friday. 

The pound was at 83.41 pence per euro, steady on the day and not far off last week's 20-month high, hit after the Bank of England raised interest rates and hinted that additional tightening is likely unless the Iran war were to de-escalate, pushing oil prices lower. 

Oil Prices and Geopolitical Developments

Recent Trends in Oil Markets

Brent crude futures were last down 3.2% on the day at $95.16 a barrel after US President Donald Trump downplayed the likelihood of renewed strikes on Iran, though attacks on ships near the Strait of Hormuz kept supply concerns in focus.

Impact of Middle East Conflict on Oil Prices

Oil prices have eased in recent weeks as markets have become more optimistic about the conflict in the Middle East being resolved, but are still far higher than before the war broke out. 

UK Economic Data and Outlook

Upcoming GDP Data Release

UK THIRD-QUARTER GDP DATA DUE THIS WEEK

Central bank policymakers and investors alike have been closely assessing the economic impact of the conflict and the energy price spike it has brought on. 

British gross domestic product data is due later this week, and a Reuters survey of economists is expecting it to reflect 0.7% growth in the third quarter, which would be an uptick from the previous period.

Economist Perspectives on UK Growth

Drivers of Economic Resilience

"The UK GDP story has been one of more than just resilience in 2026," Deutsche Bank economists said in a note. 

"Early signs of stronger productivity growth have pushed activity higher. Capex growth has also lifted output, with AI spending, defence spending, and industrial policy all boosting GDP." 

"Consumers have also been out in force — despite the energy shock. And businesses have remained fairly confident regardless of still-elevated geopolitical uncertainty."

Potential Headwinds Ahead

However, the economists said that eventually "economic tailwinds will likely be met by equally strong headwinds, as the energy shock continues to squeeze household disposable incomes".

(Reporting by Sophie Kiderlin; Editing by Jan Harvey)