The GBP/USD pair extended losses to around 1.3405 during Asian trading hours on Monday (6/23). Concerns that Iran will retaliate against the US attack on its nuclear sites boosted safe-haven flows, supporting the US Dollar (USD). Investors await preliminary readings of the Purchasing Managers' Indexes (PMIs) for June from the UK and the US, due on Monday.

The United States carried out airstrikes on three nuclear sites in Iran early Sunday despite US President Donald Trump's long-standing vows to avoid a new foreign conflict, according to Bloomberg. Trump said Iran's main nuclear enrichment facility had been "totally destroyed" and warned of a "much bigger" attack unless Iran agrees to peace. Iran has vowed to respond, saying it is "keeping all options on the table."

Rising tensions in the Middle East and fears of a wider conflict boosted demand for safe-haven assets, lifting the Greenback against Cable. Downbeat UK Retail Sales data prompted traders to raise bets on further interest rate cuts from the Bank of England (BoE), weighing on the Pound Sterling (GBP).

UK Retail Sales fell 2.7% month-on-month in May against a previous 1.3% rise (revised from 1.2%), the Office for National Statistics (ONS) reported on Friday. The reading was below market consensus for a 0.5% decline.

The BoE decided to keep interest rates unchanged at 4.25% at its June policy meeting on Thursday, as widely expected. BoE Governor Andrew Bailey said rates remained on a gradual rate cut path but warned, "The world is very unpredictable." Economists polled by Reuters expect BoE policymakers to cut rates by 25 basis points (bps) at their next meeting in August and to reduce by another 25 bps in the fourth quarter. (alg)

Source: FXstreet