The GBP/USD pair is entering a bearish consolidation phase and is hovering around 1.3465 during Friday’s Asian session, just above the almost two-week low of the previous day. Spot prices remain on track to snap a two-week losing streak and appear vulnerable to extending this week’s decline from 1.3600, an over two-month high, amid a rally in the US dollar (USD).
Despite the short-lived extension of the US-Iran ceasefire, investors remain concerned about escalating tensions in the Middle East amid a lack of progress in peace talks amid the US blockade of Iranian ports. Moreover, the US-Iran conflict over the Strait of Hormuz weakens hopes for lasting de-escalation. This may further strengthen the dollar’s status as a global reserve currency and have a negative impact on the GBP/USD pair.
Meanwhile, ongoing disruptions to energy supplies through strategic waterways continue to support elevated oil prices and continue to fuel concerns about a significant raise in global inflation. This may prompt a more hawkish stance from major central banks, including the US Federal Reserve (Fed). The outlook may prove to be another factor supporting the USD and confirming the negative outlook for the GBP/USD pair.
That said, market sentiment towards Bank of England (BoE) rate increases has increased following the release of stronger-than-expected UK PMI data on Thursday. In fact, investors are currently pricing in an interest rate tightening of around 60 basis points (bps) by the end of 2026 and a 70% chance of a rate hike in June. This, in turn, stops traders from placing aggressive bets on a bear market around the British Pound (GBP) and helps limit the adverse effects on the GBP/USD pair.
Moving forward, Friday’s economic report includes the release of the UK Retail Sales Report and the University of Michigan’s revised US Consumer Confidence Index. This can give you some momentum in the second part of the day. However, market attention remains focused on geopolitical events that may continue to cause volatility in global financial markets and create significant trading opportunities around the GBP/USD pair.
Economic indicator
Retail Sales (m/m)
Retail sales data published by the Office of National Statistics measures the volume of goods sold by UK retailers directly to end customers on a monthly basis. Changes in retail sales are widely observed as an indicator of consumer spending. Percentage changes reflect the rate of change in these sales, with the monthly reading comparing sales volumes in the reference month with the previous month. Generally speaking, a high reading is seen as bullish for the pound sterling (GBP), while a low reading is seen as bearish.
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