The pound fell for a fourth day on Friday, as it headed for its weakest monthly performance against the dollar since October, as fears of a global energy shock from the Middle East war have driven investors into the U.S. currency as a safe haven. Sterling has fallen by 1.5% in March, slightly more than in February, making this its worst monthly performance since last October. The Reuters Iran Briefing newsletter keeps you informed with the latest developments and analysis of the Iran war. Sign up here. But the pound is also the best performing currency against the dollar since the war started. The euro is down around 2.5% in that time, while the safe-haven yen and Swiss franc have lost 2.4% and 3.6%, respectively. Advertisement · Scroll to continue
The Bank of England, which prior to the war had been expected to cut rates twice this year, is now expected to deliver as many as three hikes, according to money markets, compared with expectations in a Reuters poll for no change in 2026. Bank of England policymaker Alan Taylor said on Thursday that he saw a high bar to hiking interest rates and it was preferable to hold borrowing costs until there was greater clarity on the impact on the economy from the war with Iran. Taylor, who until the start of the conflict was a long-time advocate for lower interest rates, voted this month to leave them on hold, as did all the other eight members of the Monetary Policy Committee, some of whom warned rate hikes could happen.
