The British pound drifted toward $1.32, lingering near its lowest since early December and on track for a monthly decline of over 1% against the US dollar. Risk aversion dominated markets as traders assessed the economic risks from the protracted Middle East conflict, with reports of US troop preparations for a potential ground operation overshadowing Washington’s claims of progress in Iran negotiations. Meanwhile, Bank of England policy expectations underwent a dramatic shift: markets now anticipate at least two rate hikes in 2026, with a possible third, reversing earlier bets on two cuts.