FX.co ★ Sterling Stuck Near $1.34 as UK Data Sours and Iran Talks Drag On

The pound ended the week little changed, holding just above $1.34, as trading was weighed down by weak UK economic data and ongoing uncertainty surrounding US-Iran negotiations. UK retail sales fell 1.3% in April, nearly twice the expected 0.6% decline, driven largely by a sharp drop in fuel purchases amid rising prices. At the same time, the UK budget deficit widened to £24.3 billion in April, exceeding the £20.9 billion forecast and marking the largest April shortfall since 2020. These figures followed earlier releases showing softer-than-expected April inflation, an unexpected cooling in the labor market, and May PMI surveys pointing to a contraction in private sector activity, all of which led traders to scale back expectations for further Bank of England rate hikes. On the geopolitical front, US Senator Marco Rubio noted “some good signs” in negotiations with Iran, though Tehran’s uranium stockpile and its control over the Strait of Hormuz remain major points of contention.