Pound Sterling Ticks Lower As Investors Worry Sustainability Of Iran Ceasefire

• The Pound Sterling edges down against its major peers amid doubts over the credibility of the US-Iran ceasefire.

• Israeli army kills nephew of ⁠Hezbollah leader Naim Qassem.

• Investors seek fresh cues for BoE’s monetary policy outlook.

The Pound Sterling edges lower against its major currency peers on Thursday, trading subduedly around 1.3400 against the US Dollar (USD) during the European trading session. The British currency faces mild selling pressure as market sentiment turns slightly risk-averse amid uncertainty over the sustainability of the ceasefire announcement in the Middle East on Wednesday.

S&P 500 futures are down 0.2% to near 6,770 in the European trade, reflecting a cautious market mood. The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, is slightly higher to near 99.10.

Market participants turn cautious over the longevity of the two-week US-Iran truce due to Israel’s continued attacks on Iran-backed Houthis in Lebanon. According to a Reuters report, the Israeli Defense Forces (IDF) has eliminated Ali ​Yusuf Harshi, ​the ⁠personal secretary and nephew of ⁠Hezbollah ​Secretary-General ​Naim Qassem.

Earlier, Iran’s parliament speaker and chief negotiator, Mohammad Bagher Qalibaf, also criticized the US for violating the first clause of the 10-point proposal, through a tweet on X, which states “an immediate ceasefire everywhere, including Lebanon and other regions, effective immediately”.

Meanwhile, both the US and Iran have confirmed that they are sending teams to Pakistan for the first round of negotiations over the 10-point peace proposal.

On the domestic front, investors seek fresh cues about the Bank of England (BoE) monetary policy outlook, as anchoring global inflation expectations due to optimism on the Iran war would force traders to pare bets supporting interest rate hikes in the near term.

Investors became confident of the BoE tightening monetary conditions in upcoming policy meetings, as higher energy prices due to the Middle East war had prompted inflation expectations.