Market volatility continues amid Middle East conflict and US inflation data

The GBP/USD pair remained near 1.3400-1.3454 as markets reacted to the ongoing conflict in the Middle East and February U.S. consumer price index data. U.S. headline inflation rose 2.4% year-on-year, while core inflation increased by 2.5%, both meeting expectations. Following these reports, money markets scaled back expectations for Federal Reserve interest rate cuts, now anticipating 30 basis points of easing by December. Iran has threatened to block oil shipments through the Strait of Hormuz, with military officials suggesting oil prices could reach $200 per barrel. In response, the International Energy Agency recommended releasing 400 million barrels of oil to stabilize markets. UK Chancellor Rachel Reeves stated that it is currently premature to implement measures to protect households from rising energy costs. Oxford Economics projects that a two-month closure of the Strait of Hormuz could increase UK inflation by 0.4%. Meanwhile, analysts at Standard Chartered and Morgan Stanley have pushed their expectations for Bank of England rate cuts to the second quarter. Traders continue to monitor geopolitical developments and U.S. labor market reports for further direction.