The pound holds steady near a more than three-week high as the market focuses on Middle East tensions and UK growth data.

⑴ The British pound remained largely unchanged against the US dollar on Monday, holding steady around 1.3502, close to the three-and-a-half-week high reached last Friday. Against the euro, it was also basically flat at 85.62 pence. The market is adopting a wait-and-see attitude ahead of key economic data and developments in the Middle East.⑵ The monthly growth data to be released on Thursday is expected to show that the economy remained resilient in June. Retail spending, driven by the World Cup and hot weather, provided support for consumption during the month. If the data meets expectations, it may further bolster the pound's exchange rate.⑶ Progress in Middle East negotiations over the Strait of Hormuz is influencing expectations for energy prices. Iran stated it is close to reaching an agreement with Oman on a new shipping route, but the US side still needs to meet other conditions. Oil prices rose slightly, supported by uncertainty.⑷ The Bank of England has chosen to wait for greater clarity in the Middle East situation before making decisions on interest rates, in contrast to the European Central Bank which raised rates in June. The market is currently pricing in one rate hike this year and a second fully absorbed by September next year.⑸ Strategists at ING believe the market's pricing of the Bank of England's rate path is somewhat hawkish. If expectations reverse subsequently, it could put pressure on the pound. They maintain a bearish outlook for the pound, based on the assessment that the central bank may not raise rates this year.