Pound Sterling (GBP) Holds Near Five-Month Low Amid Geopolitical Tensions and Fed Guidance

In Friday’s London session, the Pound Sterling (GBP) found temporary support near a nearly five-month low around 1.2400 against the US Dollar (USD). The GBP/USD pair continued to face downward pressure amidst escalating geopolitical tensions following reports of Israel’s attack on Iran, prompting increased demand for the safe-haven USD. Additionally, ongoing hawkish signals on interest rates from Federal Reserve (Fed) policymakers bolstered the US Dollar Index (DXY) above the critical support level of 106.00.

Atlanta Fed President Raphael Bostic’s remarks on Thursday further influenced market sentiment, indicating that progress towards the 2% inflation target would be slower than anticipated. Bostic expressed comfort with maintaining high interest rates, citing robust labor demand and resilient wage growth.

On the economic front, the United Kingdom’s Retail Sales report for March shed light on the impact of higher interest rates. Despite a decline in food and non-store retailing, UK Retail Sales remained stagnant month-on-month, as spending on fuel and non-food items offset these losses.

As geopolitical tensions persist and Fed guidance continues to shape market expectations, the Pound Sterling faces ongoing volatility, with traders closely monitoring developments for potential market shifts.

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