Pound Sterling fell against major currencies, dropping 0.3% to about 1.3360 versus the US Dollar during European trading on Tuesday. GBP\/USD moved lower as risk-off mood grew after war in the Middle East involving the United States, Israel, and Iran, reducing demand for riskier assets.<\/p>\n
Nomura said higher oil prices and firmer UK data have made the Bank of England\u2019s March rate decision more evenly poised. Nomura still projects a 25 bps cut in March and a further cut in June, with the outcome depending on upcoming data and changes in Middle East risks and energy prices.<\/p>\n
Looking back to this time in 2025, we recall the significant risk-off sentiment driven by the US-Israel conflict with Iran. This uncertainty pushed the Pound down to near 1.3360 against the dollar as demand for riskier assets faded. The market environment was defined by geopolitical anxiety.<\/p>\n
At that point in early 2025, oil prices had spiked to over $95 a barrel, fueling inflation fears and making the Bank of England hesitant. Today, with geopolitical tensions having eased, Brent crude has stabilized around a much healthier $78 a barrel. This has been a key factor in bringing UK inflation down from its 2025 peak to the latest reading of 2.8%.<\/p>\n
This contrasts sharply with the Bank of England\u2019s dilemma last year, where the March 2025 decision was a close call, ultimately resulting in them holding rates due to those inflation risks. Now, the landscape is entirely different, with markets pricing in an 85% probability of a 25 basis point rate cut later this month. The case for a cut is now much clearer than it was a year ago.<\/p>\n
For derivatives traders, this means the nature of the trade has changed. Implied volatility on GBP\/USD options is lower now, as the BoE’s path is more predictable than it was during the 2025 uncertainty. Traders might consider strategies like buying put options to speculate on a dovish repricing, as the expected rate cut could weigh on Sterling in the short term.<\/p>\n
Create your live VT Markets account<\/a>\u00a0and\u00a0start trading<\/a>\u00a0now. <\/b><\/p>\n","protected":false},"excerpt":{"rendered":" Sterling slid as Middle East war spurred risk-off trading; Nomura sees BoE March cut decision finely balanced.<\/p>\n","protected":false},"author":103,"featured_media":17032,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[59],"tags":[],"class_list":["post-50644","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-live-updates"],"acf":{"acf_article_selection_author":null},"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/50644","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/users\/103"}],"replies":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/comments?post=50644"}],"version-history":[{"count":0,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/50644\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media\/17032"}],"wp:attachment":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media?parent=50644"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/categories?post=50644"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/tags?post=50644"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}