Market Turmoil: Pound Slips Amid Middle East Tensions

The pound saw a significant drop as geopolitical tensions mount following Israel's military actions against Iran. Investors have been quick to move to the safer haven of the US dollar, leading to declines in several volatile currencies including the Australian and New Zealand dollars.

Israel conducted strikes targeting key Iranian facilities, prompting retaliation in the form of drone attacks. The international community, including the UK, is urging restraint to prevent further escalation. These developments leave investors cautious, adding to economic uncertainties.

The UK's economic outlook remains bleak with poor data in manufacturing, employment, and growth. While a spending review offers little hope for immediate relief, potential tax hikes loom. Anticipated interest rate cuts by the Bank of England may further impact the pound in the near future.

(With inputs from agencies.)