29.04.202608:23:25UTC+00Pound Slips as UK Economic Outlook Darkens

The pound slipped to $1.35 as investors digested revised UK economic forecasts and awaited key policy decisions from both the Federal Reserve and the Bank of England, as well as further developments in US-Iran relations. Lloyds raised its UK inflation forecast for 2026 to 3.4% from 2.6%, while sharply cutting its GDP growth projection to 0.5% from 1.2%. The bank no longer expects any interest rate cuts from the Bank of England this year, having previously forecast two, and now sees unemployment peaking at 5.6% in the fourth quarter, up from an earlier estimate of 5.3%.

Both the Fed and the BoE are widely expected to leave rates unchanged this week, underscoring a cautious stance amid heightened geopolitical risk in the Middle East. Even so, markets continue to price in two quarter-point rate hikes by the BoE in 2026. At the same time, oil prices climbed to their highest levels in four years as the standoff between the US and Iran persisted. According to the Wall Street Journal, President Trump instructed his aides to prepare for a prolonged naval blockade of the Strait of Hormuz in an effort to increase economic pressure on Iran.