The GBP/USD surged during the North American session, rising back above the 1.36 figure as hostilities within the Israel-Iran conflict escalated over the weekend and continued into the new week. At the time of writing, the pair trades at 1.3600, gaining 0.27%.

Last Friday, the GBP/USD retreated on risk aversion and plunged to 1.3515 as Israel delivered strikes on Iran's military and nuclear facilities, alongside targeted attacks on senior officials. Since then, Iran has retaliated, and with both parties exchanging blows, a truce seems far from reach.

The Dollar began the week on the back foot, as depicted by the US Dollar Index (DXY), which tracks the performance of the buck against a basket of six currencies. The DXY is down 0.27% at 97.88.

The economic docket is light on Monday, except for the release of the New York Fed Manufacturing Index in June, plummeting for the sixth straight month to -16.0. Aside from this, all eyes are on Retail Sales for May, ahead of the Federal Reserve's (Fed) monetary policy meeting on June 17-18, which will conclude on Wednesday, followed by Fed Chair Jerome Powell's speech. Further data will be released, housing reports, and Fed Regional Banks business activity reports.

In the UK, traders are also watching the Consumer Price Index (CPI) figures, the Bank of England's (BoE) monetary policy decision, and Retail Sales data.

The Fed is expected to keep rates unchanged at 4.25%-4.50%, but traders are awaiting the release of the latest economic projections. In the UK, markets had priced in an 84.21% chance that the BoE would keep rates unchanged at 4.25%, although markets are expecting a 25-basis-point (bps) cut by the September meeting.

Source: Fxstreet