Sterling starts the week in a less secure position than last week’s move against the US dollar might imply. The pound did post its strongest weekly gain of 2026 against the dollar, rising by more than 1%, but the move was driven mainly by dollar weakness rather than renewed confidence in the UK outlook.
That leaves the pound vulnerable as the new week begins. Cable opened around 1.34 before coming under pressure, while gains against the euro were smaller and have already started to fade. The broader backdrop remains cautious. Domestic political risk is still being priced in ahead of next month’s local elections, and leadership speculation has added another source of uncertainty.
External risk is adding to that pressure. The Middle East remains central to market sentiment, with disruption around the Strait of Hormuz still in focus. For the UK, that is especially important because of its exposure to energy markets. Higher oil prices and renewed supply concerns create a more difficult setting for sterling by raising inflation risk while also threatening growth.
The dollar, meanwhile, is under pressure for reasons that are becoming more important for markets. It weakened against both sterling and the euro last week even as geopolitical tensions remained high. Normally, that might have supported the US currency. Instead, the market appears less willing to treat the dollar as an automatic safe haven. Continued disruption around the Strait of Hormuz, combined with uncertainty around US policy communication, has undermined demand.
Finseta Plc (LON:FIN), formerly Cornerstone FS PLC, is a United Kingdom-based foreignexchange and payments company offering multi-currency accounts and payment solutions to businesses and individuals through its global payments network.
