The British pound rose against a slightly weaker US dollar on Tuesday, trading at levels last seen before the Iran war as markets hoped for a resolution to the conflict. Negotiating teams from the US and Iran could return to Islamabad later this week, five sources said, days after the highest-level talks between the two countries in decades ended without a breakthrough. Meanwhile, the US blockade of Iran’s ports got underway, angering Tehran and adding uncertainty around the crucial Strait of Hormuz shipping route. Sterling was last 0.33 per cent higher against the dollar at $1.3548. The pound last traded at this level just before the Iran war broke out in late February. Against the euro, the pound was last little changed at 87 pence. Britain’s dependence on energy imports has kept the pound under pressure for much of the conflict, during which oil and gas prices have risen sharply. The dollar, meanwhile, had been broadly strengthening, although hopes the conflict will be resolved have sent the safe-haven currency lower again. “In our view, this environment is actually quite constructive for the pound, not because anything’s actually improved. We’re just seeing traders distracted away from some really quite nasty fundamentals, political fundamentals in the UK,” Nick Rees, head of macro research at Monex Europe, said. But sterling is still expected to underperform in the coming months, he said, as attention is set to return to domestic political issues. “We do have those local elections coming up at the beginning of May and we don’t think markets or indeed a lot of politicians have grasped quite how bad these could be for the Labour Party,” Rees said, noting that there could be further speculation over a possible challenge to Prime Minister Keir Starmer’s leadership. Elsewhere, several Bank of England officials are due to speak on Tuesday, including Governor Andrew Bailey. Investors will be following the comments closely as higher energy prices have shifted market expectations away from possible rate cuts to potential rate hikes. Money markets were last pricing in at least one 25-basis-point BoE hike in 2026, with a strong chance of a second, even as most expect the central bank to keep policy steady. Bailey said earlier this month that markets were getting ahead of themselves by pricing in rate hikes.
The British pound rose against a slightly weaker US dollar on Tuesday, trading at levels last seen before the Iran war as markets hoped for a resolution to the conflict. Negotiating teams from the US and Iran could return to Islamabad later this week, five sources said, days afte…
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International mediators have proposed a 10-day ceasefire between the United States and Iran, according to a senior Iranian official cited in reports. The measure is described as intended to reduce hostilities and allow renewed talks on a prior interim agreement.
Both sides are assessing next steps in the current regional security situation.
Reports indicate that a US-Iran ceasefire has broken down amid renewed fighting, with the potential impact of mediation efforts by Pakistan, Qatar, and Oman remaining unclear. Earlier diplomatic steps included a June memorandum of understanding between the parties for further negotiations and talks hosted in Geneva in February.
The summary also references Europe’s historical role in diplomacy, including the 1814-15 Congress of Vienna.
Donald Trump stated in a Fox News interview that his representatives had spoken with Iranian officials an hour earlier and that those officials wanted to make a deal to end the conflict, though he noted they had broken prior agreements and expressed uncertainty about whether one would be reached.
He added that people do not want to die and that Iran would need to proceed carefully to avoid further losses. The remarks come amid an ongoing US-Iran conflict that has involved casualties and shipping disruptions in the Strait of Hormuz, with some social media users criticizing the repetition of similar statements.
Why the Iran-US ceasefire is falling apart Iran and the US have resumed fighting because they don’t see each other as ‘reliable negotiating partners’, says analyst Ali Vaez. Neither Iran nor the United States seems able to deliver a “knockout blow at an acceptable price” to the other side, and both know “they have no choice other than engaging in diplomacy”, but they’re not ready to make uncomfortable concessions, argues Ali Vaez, director of the Iran Project at International Crisis Group.
Vaez tells host Steve Clemons that Tehran and Washington are trying to “enforce their own interpretation” of the ceasefire agreement they signed last month. President Trump has become “frustrated” with diplomacy because he’s not seeing “the kind of quick results that he likes to see”, Vaez says.