Escalating conflict in the Middle East has become the dominant driver for currency markets, with oil surging above $100 and reshaping expectations for global interest rate policy. Safe-haven demand has supported the dollar, while stagflation concerns and shifting central bank expectations keep sterling and the euro on the defensive. Read the summaries below to see how these developing themes could impact currency pairs going forward.
Current rates
| Currency pair | Rate |
|---|---|
| gbp usd | 1.3354 |
| eur usd | 1.1562 |
| gbp eur | 1.1549 |
Rates correct as of 12:28pm on Monday 9 March but may now have changed.
The Big 3
A deeper look at the performance of major currency pairs this week. Become a subscriber to receive the full reports.
Oil surge reshapes rate cut expectations and boosts dollar
GBP/USD remained under pressure as the sharp rise in oil prices, driven by escalating conflict in the Middle East, reshaped expectations for global rate cuts and strengthened safe-haven demand for the dollar. Markets have rapidly scaled back bets on imminent Bank of England easing, while stagflation concerns are beginning to re-emerge. US and UK data this week will provide additional signals but macro focus is firmly on whether elevated energy prices persist.
War-driven energy surge keeps EUR/USD on the back foot
Conflict-driven oil price spikes continued to support the dollar and dampen appetite for risk-sensitive currencies, weighing on EUR/USD. For the euro specifically, the energy dynamic is particularly relevant given the region’s import exposure. While hopes of additional supply have helped limit deeper losses so far, the pair remains highly sensitive to oil moves and broader risk sentiment. With US inflation data due and the ECB meeting approaching, EUR/USD direction will also remain closely tied to developments in energy markets with rate cuts being reassessed.
GBP/EUR climbs as markets rethink BoE policy
For GBP/EUR there was a slight lift this week as the oil-driven inflation shock forced markets to rethink the UK rate outlook. Expectations for further Bank of England cuts have quickly been unwound, providing unexpected support for sterling against the euro. Energy markets are key for the pair but a sharp reversal in oil price could quickly reopen the debate around UK rate cuts and shift momentum back toward the euro.
Looking forward
Key dates for your calendar.
- Monday: China and Mexico inflation data. Saudi Arabia GDP. Germany industrial data. Australian consumer data.
- Tuesday: China Balance of Trade. Japan GDP. US Home Sales.
- Wednesday: The US reports inflation data.
- Thursday: US housing and building data. US Balance of Trade. BoE Governor Bailey speech.
- Friday: UK GDP. The US reports consumer income, PCE and GDP.
Here’s what we’re talking to our clients about
We’re always here to support. Here are some of the conversations we’re having:
- Iran conflict and impact
- Regulation, resilience and our upcoming webinar
- AI and the impact on the economy
The contents of this article do not constitute financial advice and are provided for general information purposes only. While the content is based on information believed to be accurate at the time of publication, no guarantee is provided.