Published: 06/03/2026 By ECAP
CONFUSED MARKETS
The British Pound has been broadly steady as investors reassess Bank of England policy expectations following a surge in energy prices linked to Middle East tensions. Higher inflation risks have reduced expectations for near-term rate cuts, supporting UK bond yields and offering some support to the pound. However, markets remain cautious as elevated energy costs and geopolitical uncertainty threaten growth and could trigger volatility if global risk sentiment deteriorates.
The Euro has traded cautiously as investors weigh the economic impact of rising energy prices and geopolitical tensions in the Middle East. Concerns that higher energy costs could hinder progress on lowering inflation have clouded the European Central Bank’s outlook. Weak Eurozone retail sales have also dampened sentiment, leaving the currency sensitive to further energy disruptions and broader market volatility in the near term.
The US Dollar remained supported as escalating Middle East tensions drove safe-haven demand and kept markets in a risk-off mood. Reports denying ceasefire contacts, hawkish signals from US officials, Iranian attacks, and a strike on a US oil tanker heightened fears of wider conflict and energy disruption. Upcoming US non-farm payrolls and retail sales data may influence expectations for Federal Reserve policy and Dollar direction.Data supplied by GC Partners