Pound Sterling steadies above two-week low vs USD; bulls seem hesitant amid Iran tensions

GBP/USD struggles to attract any meaningful buyers as rising US-Iran tensions support the USD.
Renewed inflation concerns fuel hawkish Fed expectations and further underpin the Greenback.
Rising BoE rate hike bets hold back bears from placing fresh bets around the GBP and the pair.

Haresh Menghani FXStreet

The GBP/USD pair enters a bearish consolidation phase and trades around the 1.3465 region during the Asian session on Friday, just above a nearly two-week low set the previous day. Spot prices remain on track to snap a two-week winning streak and seem vulnerable to extend this week's rejection slide from the 1.3600 mark, or over a two-month high, amid a bullish US Dollar (USD).

Despite a temporary extension of the US-Iran ceasefire, investors remain concerned over intensifying tensions in the Middle East amid the lack of progress in peace talks due to the American blockade of Iranian ports. Furthermore, the US-Iran standoff over the Strait of Hormuz dampens hopes for a durable de-escalation. This might continue to underpin the Greenback's status as the global reserve currency and act as a headwind for the GBP/USD pair.

Meanwhile, continued disruptions to energy supplies through the strategic waterway remain supportive of elevated Crude Oil prices and continue to fuel worries about a significant surge in global inflation. This could prompt a more hawkish stance from major central banks, including the US Federal Reserve (Fed). The outlook could turn out to be another factor lending support to the USD and validating the negative outlook for the GBP/USD pair.

That said, market bets on Bank of England (BoE) rate hikes increased following the release of stronger-than-expected UK PMI data on Thursday. In fact, traders are currently pricing in a roughly 60 basis points (bps) of tightening by end-2026 and a 70% chance of a rate hike in June. This, in turn, is holding back traders from placing aggressive bearish bets around the British Pound (GBP) and helps limit the downside for the GBP/USD pair.

Moving ahead, Friday's economic docket features the release of the UK Retail Sales report and the revised University of Michigan US Consumer Sentiment Index. This could provide some impetus during the latter part of the day. The market focus, however, remains glued to geopolitical developments, which might continue to infuse volatility across the global financial markets and produce some meaningful trading opportunities around the GBP/USD pair.

Economic Indicator

Retail Sales (MoM)

The Retail Sales data, released by the Office for National Statistics on a monthly basis, measures the volume of sales of goods by retailers in Great Britain directly to end customers. Changes in Retail Sales are widely followed as an indicator of consumer spending. Percent changes reflect the rate of changes in such sales, with the MoM reading comparing sales volumes in the reference month with the previous month. Generally, a high reading is seen as bullish for the Pound Sterling (GBP), while a low reading is seen as bearish.

EUR/USD holds ground near 1.1550 ahead of US Inflation data

EUR/USD is holding ground at around 1.1550 in the European session on Wednesday. The pair takes advantage of the profit-taking pullback in the US Dollar as traders reposition ahead of the critical US CPI inflation data. However, any upside attempts could be limited amid renewed US-Iran tensions.

GBP/USD keeps range near 1.3400, with eyes on US CPI

GBP/USD clings to minor recovery gains near 1.3400 in Wednesday's European trading, though it remains in a familiar range heading into the US CPI event risk. Traders keep an eye on developments around the Middle East crisis, which could ramp up volatility in the major.

Gold languishes near March low, below $4,200 as traders await US CPI report

Gold maintains its heavily offered tone through the first half of the European session and currently trades near its lowest level since March 23, around the $4,180-$4,175 region. Renewed hostilities between the US and Iran fuel inflationary concerns and bolster bets for more hawkish central banks.

Cardano's downtrend deepens despite on-chain bottoming signals

Cardano edges lower to $0.1600 signaling a potential extension of the 30% loss from last week. The altcoin remains under intense selling pressure, weighing on its retail support. Still, a spike in dormant supply re-entering circulation signals that the selling pressure has run its course, a pattern that often precedes a rebound.

US CPI data set to show inflation at three-year high in May, backing Fed hawkish tilt

The US Bureau of Labor Statistics will publish the May Consumer Price Index (CPI) data on Wednesday. The report is expected to show another step up in consumer inflation, driven by the persistently high Oil prices due to the ongoing crisis in the Middle East.

The US economy defies the rules: 100 days into the Oil shock and the recession signal is still missing

More than three months after the start of the Iran war and the resulting disruption to global energy markets, the US economy continues to display remarkable resilience. The conflict has triggered a sharp rise in Oil prices, reignited inflationary pressures and fueled widespread concerns about a potential economic slowdown.