Geopolitical tensions lift the safe-haven USD, pressuring the GBP ahead of key US PCE inflation data later Thursday.
The GBP/USD pair retreated toward 1.3400 in Asian trading Thursday as fresh US military strikes in Iran bolstered demand for the safe-haven US Dollar. The US targeted an Iranian site deemed a threat to US forces and commercial traffic, describing the action as defensive and aimed at maintaining a ceasefire.
Markets await the US April PCE Price Index report, a key inflation gauge, due later in the day. The British Pound faces additional headwinds after softer UK inflation data and a rise in the unemployment rate to 5.0% prompted traders to reduce Bank of England rate hike expectations for 2026.
Rising Middle East tensions and a cautious market mood ahead of the PCE release continue to support the USD, weighing on the GBP/USD pair.