The British pound slipped toward $1.32, nearing its lowest point since late November, as investor caution resurfaced after President Donald Trump’s prime-time address provided no clear end in sight for the Middle East conflict. Trump affirmed that the US operation was nearly complete but vowed escalated actions, including possible strikes on electrical plants, over the next two to three weeks. The lack of new justifications for the war further weighed on market sentiment.
Ongoing uncertainty and inflationary pressures have prompted a reassessment of Bank of England policy expectations. Investors now anticipate two interest rate hikes in 2026, reversing four days of reduced bets that had left expectations below two hikes by yesterday’s close. Even so, this remains below last week’s peak, when markets briefly priced in as many as four increases. The shift comes despite Bank of England Governor Andrew Bailey’s recent warning that markets were overestimating the likelihood of hikes.
