Official White House Photo by Abe McNatt
U.S. President Donald Trump cancelled his strikes on Iran, sending oil prices hurtling lower and helping the pound stage a recovery.
Having threatened to take out Iranian electricity generation capacity unless Iran opened the Strait of Hormuz by today, he signalled he was in fact not willing to escalate and confirmed the U.S. was ready to end hostilities.
Even as Iran keeps the shipping lane closed to all but select vessels, Trump said On Truth Social:
"I am pleased to report that the United States of America, and the country of Iran, have had, over the last two days, very good and productive conversations regarding a complete and total resolution of our hostilities in the Middle East. Based on the tenor and tone of these in deoth, detailed and constructive conversations, which will continue throught the week, I have instructed the Department of War to postponse and all military strikes against Iranian power plants and energy infrastructure for a five day period."
Oil falls and pound sterling rises against the euro, dollar and the majority of peers as traders sense the end of the Iran conflict is on the cards.
Trump threatened to obliterate Iran's electricity generation capacity unless the Iranian's opnened up the Strait of Hormuz by tonight. Unless Iran yielded to his demands, the U.S. would have had to significantly escalate.
Iran denied there were talks, with a state media agency saying:
“The statements of the U.S. President are part of efforts to reduce energy prices and buy time for the implementation of his military plans. There are no talks between Tehran and Washington.”
“Yes, there are initiatives from regional countries to reduce tensions, and our response to all of them is clear: we are not the party that started this war, and all these requests should be referred to Washington," the Mizan agency said.
Asked about denials made by Iran, Trump told Fox Business talks involved Steve Witkoff, Jared Kushner and their counterparts, adding a deal with Iran could be reached in five days or sooner.
News agency Axios says Egypt, Pakistan helped pass messages between the U.S. and Iran.
For markets the message is that Trump wasn't willing to escalate, and he needed a reason to call of the strikes.
Hopes of an end to hostilities can allow energy markets to recover and ensure a series of worst-case scenarios won't be inflicted on the British economy.
The pound came under pressure last week as markets fretted about the UK's outlook, judging the economy was more prone to others to another inflation spike.
Trump's decision is a welcome reprieve for pound sterling.