GBP Falls on Weak Foundations Amid Geopolitical Tensions

The British Pound (GBP) has struggled to gain momentum despite upbeat UK Retail Sales data. The currency remains pinned near three-week lows against the US Dollar (USD), trading around 1.3300 and on track for a 1% weekly decline.

The unexpected increase in retail consumption, which beat market consensus, has failed to lift the Pound. Data released by National Statistics showed an 1% rise in June, beating expectations of a 0.3% decline. Year-over-year, Retail Sales increased 4.2%, almost twice the 2.3% increment forecasted.

The US Dollar's strength, driven by growing geopolitical risks and new trade tariffs, has weighed heavily on the Pound. The Trump administration announced new tariffs of 10 to 12% on 60 trading partners, fuelling inflationary concerns across the globe.

Analysts at ING warn that Sterling's recent gains are unlikely to be sustainable, citing weak foundations in UK fundamentals. They expect 'sterling to hand back recent gains' as UK short-dated rates drift lower and fiscal risks return ahead of the autumn.