Published: 02/03/2026 By ECAP
AT A GLANCE
The British Pound starts the week under pressure as Middle East tensions trigger a risk-off move across markets.
The Euro's is is relatively stable, but the region's reliance on imported energy leaves it exposed if the conflict drags on.
The U.S. Dollar has regained safe-haven demand as strikes on Iran push energy prices higher and investors seek protection.
MIDDLE EAST
The British Pound is under pressure as markets digest soft UK data and heightened geopolitical risk after weekend strikes on Iran. Weak jobs and inflation figures have pushed expectations that the Bank of England will cut rates in March, keeping Sterling on the back foot. Rising oil prices and risk-off sentiment also hurt the Pound, with traders watching upcoming UK retail sales and preliminary PMI readings later this week for fresh direction.
The Euro is steady but not immune to risk-off moves. Traders are pricing in a cautious tone as geopolitical tensions and resilient US data support the Dollar. Speculation around possible leadership change at the European Central Bank has also been in focus, although no decision has been made. Later this week, Eurozone flash PMI and growth data could help give the shared currency clearer direction. 
The US Dollar has regained safe-haven demand amid Middle East escalation and rising oil prices. Risk aversion and solid US economic signals have kept the Dollar supported against peers. This week also features key US data, including the February jobs report, which could be a major driver for Dollar moves and expectations around Federal Reserve policy. Markets will also watch PCE inflation and earnings, adding further catalysts later in the week.Data supplied by GC Partners