Published: 13/03/2026 By ECAP
SUPPLY SHOCK
The British Pound is broadly steady but its resilience looks fragile as escalating conflict involving Iran pushes oil prices higher and fuels inflation concerns. Rising energy costs are driving UK bond yields up and shifting expectations toward tighter Bank of England policy, offering support for now. However, the currency remains vulnerable if global risk sentiment deteriorates, given the UK’s reliance on foreign capital inflows for funding.
The Euro faces pressure as surging energy prices and escalating Middle East tensions heighten inflation concerns and weaken market sentiment. Europe’s reliance on imported energy leaves the region more exposed to prolonged supply disruptions, especially if shipping routes remain restricted. Rising bond yields reflect growing inflation risks, while persistent energy shocks and geopolitical uncertainty are expected to keep the currency volatile in the near term.
The US Dollar is drawing support from rising oil prices and renewed geopolitical tensions after attacks on ships in the Gulf heightened fears of supply disruption. Energy markets remain elevated despite a large strategic reserve release, reinforcing inflation concerns. Recent US inflation data matched expectations, but persistent energy pressures could influence the Federal Reserve to keep interest rates unchanged for longer than previously anticipated.Data supplied by GC Partners