GBP/USD plummeted over 1.2% on Tuesday, backsliding through near-term congestion and popping out the other side near the 1.3400 handle after global investors were knocked off their pre-seeded hopes that the Israel-Iran altercation would find a quick and peaceful resolution.

Donald Trump, posting on social media Tuesday, declared that he wants an "UNCONDITIONAL SURRENDER" from Iranian supreme leader Ali Khamenei, and announced that American military assets were moving into the Middle East conflict region.

The escalation between Israel and Iran, on top of Trump's decision to further involve American military assets and personnel, has investors on edge as their previous hopes for a quick resolution wither on the vine.

The Trump administration has a poor track record for successfully resolving geopolitical issues, both internal and external, despite the Trump team's insistence on getting involved structurally in complex issues both at home and abroad.

US Retail Sales figures for the month of May contracted sharply, falling 0.9% MoM as consumer spending continues to slow. It is the second time this year that aggregated Retail Sales figures have contracted nearly a full percent, and previous data also saw downside revisions.

While Retail Sales data doesn't carry the market-moving weight of other key indicators, such as inflation or net monthly job gains, it is still a key factor that the Federal Reserve (Fed) weighs when considering interest rate adjustments.

Broad-market bets for the next Fed rate cut are still holding out for a September rate trim; however, odds of at least a quarter-point cut have declined to nearly 50% this week.

US President Donald Trump has gotten increasingly vocal about his wishlist to have the Fed start dropping interest rates, even as Fed policymakers hold in their "wait and see" stance as officials brace for economic fallout from Trump's whipsaw tariff "strategy".

The BoE is likewise expected to hold rates steady at 4.25%, but no meaningful shifts in policy stances, or complaints about them, are expected. The Fed reveals its latest rate call on Wednesday, with the BoE slated for early Thursday.

Source: Fxstreet