Can sterling hold gains as war risks hit UK economy?
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The British pound has taken a breather after its longest winning streak in a year, slipping against the US dollar as improving sentiment around a possible resolution to the Iran war weighed on the safe-haven greenback. The International Monetary Fund has downgraded Britain's economic growth forecast for 2026 to 0.8%, citing growing concerns over the economic fallout from the Iran war.
The British pound slipped against the US dollar on Wednesday. The International Monetary Fund has cut the UK's 2026 growth forecast to 0.8%. The UK's reliance on imported natural gas has intensified pressure on the economy. Gas prices have surged roughly 40% since the conflict began, adding to inflationary pressures. Rising energy costs have driven up government borrowing costs. Two-year UK bond yields have climbed nearly 70 basis points since late February.
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