23.06.2025 06:14
The pound sterling weakened further against the US dollar on Monday, extending its decline to near the 1.3400 level. This downward trend follows a weekend of escalating geopolitical tensions stemming from US airstrikes on Iranian nuclear facilities.
Driven by the heightened risk aversion, the US dollar, a safe-haven currency, experienced increased demand. This surge in US dollar strength was further amplified by weaker-than-expected UK retail sales data. May's retail sales figures revealed a significant 2.7% month-on-month decline, substantially lower than market predictions and adding pressure on the British pound.
The ongoing conflict in the Middle East fueled investor anxieties about wider regional conflict. This uncertainty, coupled with the disappointing retail sales data, led to increased speculation that the Bank of England might implement further interest rate cuts, further weakening the pound. While the Bank of England maintained interest rates at 4.25% at its recent meeting, Governor Andrew Bailey acknowledged the unpredictable global landscape, hinting at potential future adjustments.
Market participants are now awaiting the release of preliminary Purchasing Managers' Index (PMI) data from both the UK and the US later in the day, which could significantly influence the GBP/USD exchange rate. The ongoing conflict and the economic indicators will likely continue to shape the trajectory of the pound against the dollar in the coming days. The impact of the US military action and the potential for Iranian retaliation remain significant factors contributing to the market’s volatility.
