Market Mood
GBP: The British Pound recovered through Monday as stock markets steadied and investors stepped back from worst-case fears around the Middle East conflict. Earlier weakness faded as it became clear markets are not yet expecting a prolonged war. However, risks remain. European gas prices have surged after disruption to Qatari LNG exports, and that could feed through into higher UK energy bills in the months ahead. If inflation picks up again, it would complicate the Bank of England’s plans to support the economy.
EUR: The Euro is holding relatively firm, helped by stability in the region and lingering political uncertainty in the UK. With no major Eurozone shocks so far from the conflict, the single currency has traded calmly. Investors are also watching inflation data this week, which will shape expectations for the European Central Bank. For now, the Euro is taking its cue from global market sentiment and energy prices rather than strong domestic growth signals.
USD: The US Dollar remains supported as geopolitical tensions reinforce its safe-haven appeal. Following US strikes on Iran, investors moved back into the greenback, showing it still attracts demand in times of uncertainty. Higher oil prices also tend to favour the US, which is now a net energy exporter. If tensions escalate or markets turn defensive again, the Dollar is likely to stay firm. Any easing in conflict risks could see some of that support unwind.
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