2026.03.1308:39:56UTC+00Pound Falls to Over Three-Month Low Amid Weak UK Data

The British pound extended its decline, dropping below $1.33 to its weakest level since early December, as investors reacted to disappointing UK economic data and escalating geopolitical tensions that boosted demand for the US dollar. Data from the ONS showed that UK GDP was unchanged in January, missing market expectations for 0.2% month-on-month growth. The services sector recorded no expansion, while industrial production slipped by 0.1%. At the same time, rising tensions involving the US, Israel, and Iran drove oil prices above $100 per barrel, with no clear signs of de-escalation. The resulting jump in energy prices has intensified concerns about renewed inflationary pressures in the UK. Despite the subdued growth outlook, heightened inflation risks mean the Bank of England is now expected to keep interest rates on hold for longer, and potentially tighten policy further. Futures markets currently imply around an 80% probability of a 25-basis-point rate increase by year-end.