Finance
Sterling Ticks Higher, Remains Driven by Middle East Developments
Published by Global Banking & Finance Review®
Posted on April 9, 2026
2 min readLast updated: April 9, 2026
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Sterling edged up modestly to $1.3407 on April 9, buoyed by ceasefire-driven optimism in the Middle East, but gains stalled amid renewed conflict and continued Strait of Hormuz uncertainties. It also held ground against the euro, amid diverging ECB‑BoE rate expectations.
Sterling Gains Amid Middle East Tensions and US-Iran Ceasefire Uncertainty
Market Reactions to Geopolitical Developments
Sterling's Performance Against the Dollar
LONDON, April 9 (Reuters) - The pound inched higher on the dollar on Thursday and held onto the bulk of U.S.-Iran ceasefire-inspired gains the previous session, though with that deal looking fragile it failed to climb any further.
Sterling was last up 0.1% on the dollar at $1.3407, well up from below $1.33 before the deal was announced but off its Wednesday high of $1.348, reflecting traders' nervousness about how sustainable the ceasefire will be.
Impact of Middle East Tensions
Israel bombed more targets in Lebanon on Thursday, and there was no sign Iran had lifted its blockade of the Strait of Hormuz, which has caused the worst disruption to global energy supplies in history.
Tehran said there would be no deal as long as Israel was striking Lebanon.
Dollar and Pound Movements Amid Conflict
The dollar has appreciated throughout the conflict as investors see the U.S. economy as being less exposed to the war - it is a net energy exporter - than other countries such as Britain.
The pound, like other European currencies, has risen or fallen on the dollar depending on headlines.
Sterling's Performance Against the Euro
The pound also gained on the euro on Wednesday, which Francesco Pesole, currency analyst at ING, said was due to sterling's higher sensitivity to gains in equities, which surged on Wednesday.
The euro was last at 87.11 pence, a touch higher on the day, and bouncing off its Wednesday low of 86.88 pence.
Analyst Insights and Rate Hike Expectations
Pesole said he does not think the pound can appreciate much more on the euro, noting that expectations of rate hikes from the European Central Bank could prove more sustained than those for the Bank of England.
"After all, the BoE was already ready to cut before the war began," he said.
(Reporting by Alun John; Editing by Emelia Sithole-Matarise)
Key Takeaways
- •Sterling up ~0.1% to $1.3407, retaining much of the previous session’s gains from Iran‑U.S. ceasefire optimism, but held back by fragile ceasefire and renewed hostilities in Lebanon (apnews.com)
- •Strait of Hormuz remained blocked despite ceasefire news—hindering shipping and energy markets, with Iran demanding Israel halt strikes on Lebanon before any reopening (apnews.com)
- •Sterling also gained against the euro; ING’s Francesco Pesole noted pound’s equity sensitivity but suggested limited further upside as ECB rate‑hike expectations may remain stronger than those for the Bank of England (exchangerates.org.uk)
References
Frequently Asked Questions about Sterling ticks higher, remains driven by Middle East developments
1Why did Sterling rise against the dollar?
Sterling rose on U.S.-Iran ceasefire news, reflecting market optimism despite ongoing Middle East tensions.
2How is the Middle East conflict affecting the pound?
The conflict causes volatility in Sterling, with traders reacting to developments and headlines from the region.
3What impact does energy supply disruption have on currencies?
Disruptions, like the Strait of Hormuz blockade, affect global supply chains and cause volatility in affected currencies.
4How does Sterling compare to the euro amid the conflict?
Sterling gained against the euro due to its sensitivity to equity gains, but further appreciation may be limited.
5What role do central banks play in currency movement?
Expectations for rate hikes from the ECB versus the Bank of England influence Sterling's movement against other currencies.
