Sterling Surges Amid U.S.-Brokered Ceasefire

Sterling rose against the euro and dollar after a U.S.-brokered ceasefire between Israel and Iran. The pound gained as risk assets rallied, even as economic concerns and Bank of England's cautious stance exerted pressure. Analysts anticipate monetary policy adjustments, with rate cuts expected by year-end.

Sterling rose against the euro and dollar on Tuesday, as risk assets gained momentum following President Donald Trump's announcement of a ceasefire between Israel and Iran.

In response, Israel's Defense Minister, Israel Katz, instructed military action against Tehran, citing missile launches in violation of the truce. Iran refuted these claims, stating no missile launches occurred. Investors, distant from sterling in uncertain times, tend to prefer stable currencies like the Swiss franc or the Japanese yen.

The euro dropped by 0.40% to 85.23 pence, while the dollar's safe-haven status is questioned amid U.S. fiscal policy concerns. Despite economic uncertainties, the pound rose by 0.55% to $1.3601. The Bank of England's recent decision to hold interest rates has signaled caution about economic growth, with rate cuts possible by year-end.

(With inputs from agencies.)