Fed Decisions Amid Middle East Tensions Press Sterling

Sterling held close to its four-week low against the dollar as markets focused on the Federal Reserve's policy decision amidst rising Middle East tensions. Despite oil prices soaring, the Bank of England is expected to maintain steady interest rates amid political changes with Andy Burnham becoming the new UK Prime Minister.

Sterling remained near its lowest level in four weeks against the dollar on Wednesday, as investors turned their focus to the Federal Reserve's upcoming monetary policy decision. Escalating tensions in the Middle East added to the market's volatility, with the pound trading steadily at $1.3291, not far from its weakest level since July 2.

Oil prices surged by over 4% on the same day due to the Middle East tensions, following U.S. and Saudi military actions in Iraq and an intercepted Iranian missile attack on U.S. forces. Market participants awaited significant central bank decisions, including those from the Bank of England and the Bank of Japan, adding to the high-stakes atmosphere.

The Bank of England is set to announce its decision on Thursday, amid expectations of steady interest rates, during a politically turbulent time with Andy Burnham recently appointed as the UK's new Prime Minister. Financial experts, like Ebury's Matthew Ryan, suggest the tensions in the Middle East could influence the central bank's hawkish elements. Nonetheless, current oil prices and economic data do not seem to justify an immediate rate hike.