Pound Sterling Slips Against Dollar, Euro Amid Middle East Conflict, UK Inflation Outlook

The British pound has experienced mixed movements against major currencies amid geopolitical tensions and upcoming economic data releases. Sterling slipped slightly against the US dollar and the euro as market participants awaited UK inflation figures and Bank of England policy decisions, with expectations for steady interest rates but potential cuts later in the year. The ongoing Israel-Iran conflict has increased demand for safe-haven assets like the US dollar, adding to sterling's volatility. Analysts from Lloyds Bank forecast further declines for the pound against the euro but anticipate continued strength against the dollar, although momentum may slow. The pound’s weakness against the euro is also attributed to a deteriorating UK economic outlook, including labor market concerns and GDP drops, which fuel speculation of future rate cuts by the BoE. Meanwhile, the US-UK tariff agreement signed by President Donald Trump aims to ease trade barriers, but unresolved issues like steel and aluminum tariffs persist, limiting the deal's immediate impact on the pound.