2026.04.2708:03:48UTC+00Sterling Recovers Above $1.35 as Markets Eye Data

The pound held above $1.35, rebounding from two-week lows, as investors braced for a busy week of economic data and global interest rate decisions while closely monitoring US-Iran peace talks. The Bank of England is widely expected to keep its benchmark rate unchanged at 3.75% amid the ongoing Middle East crisis, with analysts forecasting a near-unanimous or strong majority vote to maintain current policy. This comes on the heels of last week’s UK inflation report for March, which showed annual CPI at 3.3%, driven in part by surging fuel costs. In response, markets have shifted to price in at least two rate hikes this year, up from one previously, with a possible third under consideration. Compounding the economic backdrop, oil prices have climbed sharply as the Strait of Hormuz remains blocked and US-Iran negotiations appear stalled. Political uncertainty is also mounting ahead of the May 7 local elections, with Prime Minister Keir Starmer facing criticism over his decision to appoint Peter Mandelson as UK Ambassador to the United States.