The pound traded slightly above $1.35, retreating from last week’s two-month high of $1.366, as investors turned their attention to Britain’s municipal elections on Thursday, with polls indicating Prime Minister Keir Starmer’s Labour Party could suffer a notable setback. Meanwhile, oil prices remained near four-year highs amid ongoing Middle East tensions, with the US and Iran locked in a dispute over control of the Strait of Hormuz. Markets are pricing in nearly three quarter-point rate hikes from the Bank of England this year. Yet, uncertainty persists after the BoE kept rates unchanged, citing the broad economic fallout from the Iran conflict. Governor Andrew Bailey called the decision a “difficult judgement call,” cautioning that delaying action until inflationary pressures are evident could lead to a late response.
