Recent geopolitical tensions in the Middle East, including the Iran conflict, have driven sharp rises in energy and fuel prices, pushing UK CPI inflation to 3.3% in March 2026 from 3.0% the prior month and elevating trader expectations for the full-year average. This has concentrated market-implied odds between the 4.0-4.4% and 4.5%+ brackets, reflecting uncertainty over whether the energy shock will persist through the second half or moderate as base effects fade. Bank of England projections and recent forecasts from the OBR and NIESR highlight a trajectory above 3% for much of 2026, with labor market slack providing some offset but not enough to counter near-term cost pressures. Key upcoming data releases on energy prices and May CPI will likely determine whether sentiment shifts toward the higher range or stabilizes around 4%.