The Currency Exchange (NatWest Markets)

Calmed by Uncertainty

In this episode of NatWest’s Currency Exchange, FX strategists Brian Dangerfield and Paul Robson examine why major G10 currency markets have remained unusually calm despite the heightened geopolitical risk from the Iran‑related Middle East conflict. They attribute the lull to market paralysis caused by uncertainty over U.S. and Israeli objectives, shifting dollar positioning, and divergent expectations of de‑escalation versus escalation. Robson highlights the surprising resilience of the British pound, noting that expectations of aggressive Bank of England rate cuts and strong fiscal fundamentals have offset typical downside pressure, while also discussing the yen’s vulnerability to fiscal strain and energy price shocks. Both strategists warn that once the acute crisis eases, lingering fiscal stimulus, especially higher defence spending, will become the dominant driver of currency moves.