Sterling Slides to 1.3189 as BoE Holds at 3.75% and Hormuz Risks Linger
Updated
Updated · Barchart · Jun 19
Sterling Slides to 1.3189 as BoE Holds at 3.75% and Hormuz Risks Linger
1 articles · Updated · Barchart · Jun 19
Summary
Sterling fell sharply over the past two sessions, dragging GBP/USD toward 1.3189 — the lower edge of a trading range that has held since May 2025.
The selloff reflects a three-way drag: fragile Strait of Hormuz ceasefire hopes, a Bank of England that kept rates at 3.75% on June 18, and renewed political instability around Prime Minister Keir Starmer.
Oil-market anxiety has stayed central because the Hormuz chokepoint carries about a fifth of global oil and gas flows, leaving the UK exposed as a net energy importer even after a June 17 US-Iran memorandum to reopen traffic.
BoE policy has offered little support for the pound, with softer UK inflation increasing expectations for easing later this year even as the MPC again voted to hold and kept a cautious tone.
Traders now see 1.3189 as the key pivot: a hold could return Cable toward 1.3451, while a break lower could open losses toward 1.30 and then 1.273.
With a leadership crisis looming, could a new UK Prime Minister unexpectedly rescue the Pound from its year-long decline?
Can the Bank of England navigate an energy shock and political turmoil without pushing the UK economy into recession?
The US-Iran deal offers a lifeline, but what happens to UK energy prices if the fragile Gulf ceasefire collapses?
Sterling Under Pressure: How the 2026 Hormuz Energy Shock and Persistent Inflation Threaten the UK Economy and Bank of England Policy
Overview
Sterling is currently weak, with analysts expecting the GBP/USD pair to fall as the United States shows stronger growth than the UK. In response, the Bank of England has chosen an 'active hold' on its benchmark lending rate, keeping it steady at 3.75% since December 2025. This decision comes as the Monetary Policy Committee recently voted 7-2 to maintain the rate, supported by inflation data showing the Consumer Prices Index remained unchanged at 2.8% in May 2026. The Bank is navigating a complex economic environment, balancing inflation concerns with a weaker growth outlook.