Image: White House / Daniel Torok. President Donald J. Trump oversees Operation Epic Fury at Mar-a-Lago, Palm Beach, FL, Feb. 28, 2026.

The British pound is set to come under pressure in Monday trade as markets factor U.S. and Israeli strikes on Iran.

Pound Sterling Live covered the pound's fall on Friday as we received concrete signals that the U.S. would attack Iran over the weekend; the pound was softer across the board, with the franc leading the pack, confirming a risk-off mood was cloaking markets.

Those strikes duly came, with Israel and the U.S. carrying out over 2000 sorties by the time of writing Sunday.

That pre-strike FX market action on Friday provides the template for Monday: weaker GBP against the safe-havens CHF, USD, JPY and EUR.

"Based on previous Middle East escalation the bias is for stronger CHF, EURUSD skewed higher and probably JPY will work due to the current short positioning," says Namik Immelbäck, chief strategist at SEB.

"An equity correction would arguably hit AUD, NZD, GBP (vs Euro) and CNH the most," he adds.

"The first order reaction to the weekend's escalation will likely see the dollar benefit on the back of higher energy prices and elevated risk aversion," says Themistoklis Fiotakis

Oftentimes geopolitical tensions tend to be rapidly faded by traders as there tends to be limited impact on regional oil infrastructure and shipping, confirming oil is to be the key asset for financial markets and the global economy.

The risk this time around is that the elimination of Iran's Supreme Leader Ali Hosseini Khamenei and other senior Iranian leaders prompts a protracted war whereby Iran goes all-in against the U.S., Israel and allies.

There's a real risk global shipping lanes and oil facilities are targeted by a desperate Iran, putting significant upside pressure on oil prices.

Iran has responded by firing ballistic missiles and drones at U.S. bases and Israel, with the fallout being felt across neighbouring Arab states that host American forces or sit under flight paths.

Iranian missiles and intercepts sent shrapnel over Abu Dhabi and the Palm Jumeirah area of Dubai, leading to multiple injuries and shutting down flights at Dubai's main airports.

The longer the conflict goes on the greater the threat to the global economy from a renewed inflationary impulse, making for a more enduring FX impact as a more protracted risk-off move takes hold.

For the pound, that implies greater downside in key pairs GBP/EUR and GPB/USD. Gains in GBP/AUD and GBP/NZD are possible, given the two antipodeans would tend to fall in a global risk-off market scenario.

A big question mark is what happens to the oil-linked currencies, such as the Canadian dollar and Norwegian Krone. "NOK can spike on oil prices," says Immelbäck.