12.03.202608:30:12UTC+00Pound Holds Near Three-Month Low Amid Middle East Tensions

The British pound weakened to $1.338, trading near the three-month low reached last week, as continued uncertainty surrounding the Middle East conflict strengthened the US dollar and fueled concerns about rising inflation in the UK. Oil prices extended their rally and briefly surpassed $100 per barrel after Iran intensified attacks on oil and transportation infrastructure across the region. The International Energy Agency’s plan to release 400 million barrels from strategic reserves has so far provided limited relief, as the additional supply may take weeks or even months to reach the market. In interest rate markets, traders are now assigning more than a 50% probability to a 25-basis-point rate hike by the Bank of England in December, a notable shift from expectations of no policy change as recently as Wednesday. Investors are also awaiting key UK economic indicators, including monthly GDP data scheduled for release on Friday.