British Pound slips below 1.3500 as fresh US strikes on Iran boost safe-haven demand.

• GBP/USD slips toward 1.3470 during Friday’s Asian session.
• The US carried out a sixth consecutive day of strikes against Iran, fueling geopolitical tensions.
• Markets continue to increase expectations for additional Bank of England rate hikes this year.

The GBP/USD pair remains under modest pressure, slipping to around 1.3470 during Friday’s Asian session as heightened geopolitical tensions in the Middle East dampen investor risk appetite and lend support to the US Dollar. Market participants are also awaiting the preliminary University of Michigan Consumer Sentiment Index for July, due later in the day.

Risk aversion intensified after the United States launched a sixth consecutive day of military strikes against Iran. Authorities in Bandar Abbas reported damage to civilian infrastructure, including electricity facilities and a railway station, adding to concerns over a widening regional conflict.

The US Central Command (CENTCOM) stated that the latest operations were aimed at further weakening Iran’s military capabilities and confirmed that naval forces had boarded a vessel as part of efforts to enforce the blockade around the strategic waterway. Earlier this week, President Donald Trump warned that Iranian bridges and power infrastructure could become targets unless Tehran returned to negotiations. The escalating conflict has increased demand for traditional safe-haven assets, providing additional support for the US Dollar against Sterling.

Meanwhile, recent US inflation figures have offered mixed signals. Consumer price inflation eased in June, while producer prices also declined, reinforcing expectations that inflationary pressures are moderating. Even so, traders continue to assign roughly a 55% probability to a Federal Reserve interest rate hike in September, according to the CME FedWatch Tool.

In the UK, Bank of England Governor Andrew Bailey acknowledged concerns over the renewed hostilities between the US and Iran but said the conflict has not materially altered the country’s inflation outlook. Markets continue to expect the BoE to raise interest rates at its November meeting, with another increase largely priced in by April 2027, according to Reuters.