Pound Rebounds Ahead of UK Retail Sales Data Amid Middle East Tensions
The British Pound staged a recovery on Friday, breaking its five-day losing streak as it inched above 1.3300 against the US Dollar. The move comes ahead of the release of UK Retail Sales data, which is expected to show a decline of 0.3% MoM in June. This could impact the Bank of England's (BoE) interest rate decision next week.
Renewed tensions in the Middle East have sparked concerns over global stability, potentially underpinning the US Dollar as a safe-haven currency. The UK Central Command has launched its 13th consecutive night against Iranian targets, with US President Donald Trump warning of 'major military punishment' for Iran and its Houthi allies.
Analysts at Scotiabank note that policy expectations remain firmly anchored ahead of the BoE's decision next week. Markets are expecting no change in the benchmark interest rate, which is currently held at 3.75%. A surprise upside reading in the UK Retail Sales data could reinforce the BoE's stance and support the Pound.