The pound faces continuing impact from Middle East conflict, the UK's fragile economic background amplifying geopolitical risks.

Convera's Antonio Ruggiero pointed out in the report that if the Middle East conflict continues, the pound will face significant risks. He stated that although it is still too early to assess whether this conflict will have substantial negative economic impacts, given the UK's fragile political and economic background, its performance is particularly worth watching. He believes that the increase in oil prices caused by the war could drag down economic growth, while also raising inflation. "This will lead to a decrease in tax revenue, and push up the government's borrowing costs due to the increase in risk premiums." He pointed out that the improvement in fiscal space announced in the spring budget on Tuesday will become meaningless in this context.