Finance
Sterling Slides as Trump Vows More Strikes on Iran, Driving up Dollar
Published by Global Banking & Finance Review®
Posted on April 2, 2026
2 min readLast updated: April 2, 2026
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Sterling slid 0.7% to $1.321 after President Trump vowed “extremely hard” strikes on Iran over the next two to three weeks, fueling a surge in oil and a safe‑haven rush into the dollar.
Sterling Falls Sharply as Trump Vows Strikes on Iran, Driving Up Dollar
By Harry Robertson
Market Reaction to Trump’s Iran Comments
Sterling and Dollar Movements
LONDON, April 2 (Reuters) - The pound fell sharply on Thursday after U.S. President Donald Trump vowed more aggressive strikes on Iran and gave little reassurance about the reopening of the Strait of Hormuz, sending oil surging and investors flocking to the U.S. dollar.
Sterling was last down 0.7% at $1.321, just a day after rising 0.6% on hopes that the war could soon be winding down.
The fall was largely a function of a jump in the dollar, which is seen as a safe-haven asset. The index measuring the U.S. currency against its peers rose 0.5%.
Trump’s Televised Address
Escalation of Military Operations
In a televised address on Wednesday, Trump said military operations would be intensified in the next two to three weeks and offered no concrete timeline for ending the conflict.
"We're going to hit them extremely hard over the next two to three weeks," he said. "We're going to bring them back to the Stone Ages where they belong."
Strait of Hormuz and Oil Supply
Trump said the U.S. did not need the Strait of Hormuz and again challenged allies who depend on Gulf oil to work towards reopening it.
Impact on Oil and Financial Markets
Oil Prices Surge
Oil prices jumped after Trump's speech and stock markets and equity futures tumbled. Brent crude, the global benchmark, was last up 6.6% at $107.90 a barrel.
Safe-Haven Flows
Investor Sentiment
"Risk aversion is following the typical playbook that we've seen throughout the conflict," said Michael Brown, senior research strategist at Pepperstone.
"Crude rallying, and taking everything but the dollar lower in turn, with the greenback remaining the only real safe haven."
Broader Economic Concerns
Impact on UK Economy
The pound and British government bonds have been hit hard during the conflict, reflecting worries about the economy due to the country's reliance on imported energy and its fragile public finances.
Sterling vs. Euro
Sterling dipped against the euro on Thursday, with the euro zone's currency up 0.15% at 87.24 pence.
(Reporting by Harry Robertson; Editing by Jan Harvey)
Key Takeaways
- •Trump’s aggressive rhetoric on Iran escalates geopolitical risk, boosting oil prices and safe‑haven demand for the U.S. dollar
- •Sterling is under pressure due to the U.K.’s energy import reliance and fragile fiscal outlook amid surging inflationary concerns
- •Oil popped around 6% (Brent ~ $108–108/barrel), intensifying pressure on currencies like the pound and accelerating divergence in central bank outlooks
References
Frequently Asked Questions about Sterling slides as Trump vows more strikes on Iran, driving up dollar
1Why did the pound sterling fall against the dollar?
The pound fell due to increased demand for the safe-haven U.S. dollar after Trump vowed more aggressive strikes on Iran.
2How did Trump’s announcement impact oil prices?
Oil prices surged, with Brent crude rising 6.6% to $107.90 a barrel, following Trump's address.
3What was the market’s reaction to the ongoing conflict in Iran?
Investors flocked to the dollar, oil prices jumped, and stock markets as well as equity futures tumbled amid increased risk aversion.
4How did the euro perform against the pound?
The euro rose 0.15% against the pound, reaching 87.24 pence, as sterling weakened further.
5What are the economic concerns for the UK amid the conflict?
The UK faces worries due to its reliance on imported energy and fragile public finances, impacting the pound and government bonds.
