The pound rebounded on Monday after President Donald Trump said the U.S. would postpone strikes on Iranian power plants for five days, abandoning his previous threat that had sent stocks tumbling and the dollar surging. Sterling was last up 1% against the dollar at $1.348, after earlier falling more than 0.5% as investors flocked to the dollar. The Reuters Iran Briefing newsletter keeps you informed with the latest developments and analysis of the Iran war. Sign up here. Trump's postponement sparked a rebound in stock markets, which had been trading deeply in the red, and also alleviated some of the recent pain in Britain's fragile bond markets. Advertisement · Scroll to continue
"Markets have been taken on a wild ride, as investors have swung from deep pessimism to giddy optimism about the trajectory of the war with Iran," said Susannah Streeter, chief investment strategist at Wealth Club. Yet she added: "Clinging to President Trump’s words is fraught with risks." Ten-year Gilt yields were last down 11 basis points at 4.883%, having earlier risen to their highest level since 2008 as markets priced in four interest rate hikes from the Bank of England this year. Yields rise as prices fall and vice versa. Traders were last betting on around two 25-basis-point hikes from the BoE in 2026, a dramatic change from the two cuts priced in before the war but down sharply from earlier in the day. Advertisement · Scroll to continue
The euro was down 0.4% against the pound at 86.37 pence as the drop in energy prices alleviated some of the fears about the potential impact of the war on the UK economy, which is highly reliant on imported oil and gas.
