By Lucy Raitano LONDON, April 24 (Reuters) - The British pound rose slightly against the dollar on Friday but was headed for a weekly loss, as traders kept an eye on stalled peace negotiations between
Sterling Rises but Faces Weekly Loss as Iran Tensions Overshadow UK Data
Market Overview and Key Drivers
By Lucy Raitano
Sterling's Performance Against Major Currencies
LONDON, April 24 (Reuters) - The British pound rose slightly against the dollar on Friday but was headed for a weekly loss, as traders kept an eye on stalled peace negotiations between the U.S. and Iran while some strong UK retail data barely moved the needle.
Sterling was 0.1% higher versus the dollar at $1.348, as broader currency markets traded largely range-bound.
Against the euro, the pound fell 0.1% to 86.69.
UK Retail Sales and Consumer Sentiment
Impact of Retail Sales Data
UK retail sales for March rose more than expected, official data showed. British motorists worried about fuel price increases rushed to the pumps immediately after the start of the Iran war, pushing up total sales volumes for the country's retail sector.
"There had been concerns that the uncertainty over the impact of the situation in the Middle East on household finances might dampen consumers' appetite to spend, but even the figures for March were fairly robust," Investec economists wrote in a note.
Consumer Morale and Inflation Concerns
However the data comes hot on the heels of a survey that on Thursday showed British consumer morale slid this month to its lowest since October 2023 as households ramped up their expectations for price rises.
The war in the Middle East has caused a global energy price spike, fanning concern around inflation and growth.
Bank of England Policy Outlook
Interest Rate Expectations
Traders are betting on at least one 25-basis-point rate increase from the Bank of England this year, a marked reversal from before the war when they had been eyeing two.
The BoE will deliver its next policy decision on Thursday, with markets placing an 83% bet that the central bank will hold rates at 3.75%.
Impact of Geopolitical Tensions on Sterling
The pound shed 1.9% in March as the Middle East conflict weighed on markets with the closure of the Strait of Hormuz - critical for the flow of energy - dealing a blow to the outlook for the British economy.
It has now recouped the losses in April and is on track for its biggest monthly rise since August.
Global Market Risks
Bank of England's Global Outlook
Elsewhere, the BoE expects stock markets around the world to fall because current share prices do not fully reflect the many risks facing the global economy, Deputy Governor Sarah Breeden said in an interview with the BBC on Friday.
Reporting
(Reporting by Lucy Raitano in London; Editing by Andrew Heavens)
