GBP/USD extends its downside to around 1.3490 in Friday’s Asian session.
Uncertainty over Fed rate cuts curbs risk appetite, undermining the Pound Sterling.
Traders await the UK June Retail Sales report, which is due later on Friday.
The GBP/USD pair extends the decline to near 1.3490 during the Asian trading hours on Friday, pressured by renewed US Dollar (USD) demand. Traders prefer to wait on the sidelines ahead of US President Donald Trump's tariff deadline and the Federal Reserve (Fed) policy meeting next week. Later on Friday, the release of the UK June Retail Sales report will take center stage.
Uncertainty over interest-rate cuts by the US central bank curbed risk appetite, which undermines the Pound Sterling (GBP). Traders reduce their bets that the Fed will deliver a rate cut in the July meeting, expecting less than two reductions this year as jobless claims fell for six consecutive weeks.
Meanwhile, Fed Governor Christopher Waller delivered dovish comments, saying that policymakers should lower rates this month to support a labor market that is showing signs of weakness. Markets largely believe that the Fed will stay on hold when it meets next week but that it will likely cut rates in September and once more before the end of the year.
On the GBP’s front, traders are increasingly confident that the Bank of England (BoE) will cut interest rates at its August monetary policy meeting, which might weigh on the Cable. However, traders will take more cues from the UK Retail Sales data due on Friday, which is expected to show an increase of 1.2% MoM in June from a fall of 2.7% in May. If the data show a stronger-than-expected outcome, this could boost the GBP against the USD in the near term.
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