Pound Sterling Slides as Oil Prices Jump above $100

Modified: Monday, 9 March 2026 20:31 BST - Written by Ben Hughes

STORY LINK Pound Sterling Slides as Oil Prices Jump above $100

The Pound US Dollar (GBP/USD) exchange rate dropped sharply at the start of the week as escalating tensions in the Middle East sent shockwaves through global markets.

At the time of writing, GBP/USD was trading at $1.3352. Although the pairing recovered from its lowest levels earlier in the session, it remained down 0.4% compared with its opening level.

The US Dollar climbed sharply as markets responded to US and Israeli strikes on Iranian energy infrastructure over the weekend.

Reports indicated that American and Israeli aircraft targeted at least five oil facilities in and around Tehran. In response, Iran warned it could retaliate by attacking energy installations in neighbouring countries, fuelling fears of a broader regional escalation.

The renewed tensions in the Middle East pushed oil prices above $100 per barrel, intensifying concerns about a potential energy shock that could weigh on global growth while driving inflation higher.

Amid the uncertainty, investors gravitated towards the safe-haven US Dollar. The ‘Greenback’ was also supported by the US’s relative energy independence, which could help insulate the American economy from the worst effects of rising oil prices.

The Pound weakened against the US Dollar as a risk-off mood and mounting concerns about the UK economy weighed on Sterling.

Surging energy prices prompted fears that higher costs could derail the UK’s fragile recovery. Investors are also wary that rising bills may create additional fiscal pressure for the government as it attempts to bring public debt under control.

Sterling managed to recover part of its earlier losses as markets sharply revised their expectations for Bank of England interest rates. Even so, the Pound remained on the back foot overall against the strengthening ‘Greenback’.

Short-Term GBP/USD Forecast: Geopolitics and US Jobs Data in Focus

Tuesday’s session will bring the latest weekly US ADP employment change figures. Evidence of cooling in the American labour market could place some pressure on the US Dollar.

Developments in the Middle East are likely to remain a key driver of market sentiment. Ongoing tensions could keep markets on edge and potentially boost demand for the safe-haven US Dollar if investors remain cautious.

Any further escalation in the conflict may dampen risk appetite, while concerns about a global energy shock could also weigh on markets. Rising oil prices and intensifying geopolitical uncertainty may therefore continue to pressure the Pound US Dollar exchange rate.

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TAGS: Pound Dollar Forecasts