GBP regains momentum, rising back above the 1.3300 mark before the UK Retail Sales report.

The pair gains traction as the US conducts a 13th straight night of military strikes against Iran, fueling geopolitical uncertainty. Market participants are now turning their attention to the UK’s June Retail Sales data, due later on Friday, for fresh direction and trading cues.

GBP/USD rebounds toward 1.3325, ending a five-session decline during Friday’s Asian trading hours.

Despite the recovery, gains may remain capped as escalating military tensions in the Middle East continue to support demand for the safe-haven US Dollar. Investors are also awaiting the release of the UK Retail Sales report later in the day for fresh market direction.

Geopolitical risks remain elevated after the US Central Command (CENTCOM) carried out a 13th consecutive night of strikes on Iranian-linked targets. US President Donald Trump stated that Iran would be held accountable for Houthi attacks and warned that both Iran and the Houthis could face significant military consequences, further boosting risk aversion and underpinning the Greenback.

Meanwhile, expectations for the Bank of England remain largely unchanged. Markets widely anticipate the BoE will leave its benchmark interest rate at 3.75% at next week’s meeting while assessing the economic impact of the Middle East conflict. According to Reuters, traders continue to price in one or two quarter-point rate increases by the end of 2026, little changed from earlier expectations.

Attention now turns to the UK Retail Sales figures, which could provide additional insight into the BoE’s policy outlook. Economists forecast a 0.3% monthly decline in June sales following May’s 1.2% increase. A stronger-than-expected result could strengthen the case for the BoE to maintain a hawkish stance, potentially offering further support to the Pound.

Analysts at Scotiabank highlighted that market expectations remain firmly anchored ahead of the BoE meeting, with investors largely expecting no change in interest rates. The stable policy outlook is likely to continue shaping near-term GBP/USD trading as markets await fresh economic data for clearer direction.