GBP/USD Under Pressure as Oil Surge on Iran Conflict Sinks FTSE 100

GBP/USD faces significant downward pressure as escalating geopolitical tensions between Iran and Israel send shockwaves through UK financial markets. The FTSE 100 plunged 265 points to 10,040, a drop of approximately 2.6%, as Brent crude oil prices soared on fears of disruption to energy facilities in the Middle East. The Bank of England held interest rates steady at its midday decision but delivered a hawkish tilt that further weighed on gilts and UK equities. UK labor market data showed the unemployment rate holding stable at 5.2%, while wage growth decelerated, providing mixed signals on the domestic economic outlook. The hawkish BoE stance typically supports sterling, but the risk-off environment driven by geopolitical turmoil is overwhelming any rate-differential benefit, pushing traders toward safe-haven currencies like the US dollar, Japanese yen, and Swiss franc. Near-term, GBP/USD traders should monitor oil price developments closely, as sustained energy price increases could stoke UK inflation concerns while simultaneously dampening growth prospects, creating a stagflationary headwind for the pound.