• GBP/USD struggles to gain any meaningful traction on Friday amid mixed fundamental cues.
• UK political uncertainty counters BoE rate hike bets and keeps the GBP bulls on the defensive.
• Geopolitical risks and hawkish Fed expectations underpin the USD, keeping a lid on the pair.

The GBP/USD pair is seen oscillating in a narrow trading band during the Asian session on Friday, though it remains on track to register modest weekly gains. Spot prices remain capped near the 100-day Exponential Moving Average (EMA) and currently trade around the 1.3425-1.3430 region, nearly unchanged for the day.

The British Pound (GBP) has been struggling to attract any meaningful buyers amid mixed signals over the Bank of England's (BoE) policy outlook and the UK political uncertainty. In fact, Swati Dhingra, an external MPC member, said that the BoE might not need to raise rates if its "scenario ​B" - where higher energy prices have only moderate second-round effects - materialises. In contrast, fellow external member Catherine Mann warned that high inflation in late 2026 could become embedded in wage deals for 2027.

Meanwhile, BoE Governor Andrew Bailey said on Wednesday that a rise in market interest rates since the start of the Iran war has given the central bank more time to assess the ​economic impact of the conflict. Nevertheless, markets are still pricing in the possibility of at least one interest rate hike by the BoE in 2026. The GBP bulls, however, seem hesitant amid serious leadership challenges to UK Prime Minister Keir Starmer. This, along with a bullish US Dollar (USD), contributes to keeping a lid on the GBP/USD pair.

Despite the incoming positive headlines, investors remain skeptical about a US-Iran peace deal amid major disagreements over Tehran's nuclear program and a standoff over the critical Strait of Hormuz. In fact, the Islamic Republic’s Supreme Leader, Mojtaba Khamenei, stated that Iran’s uranium enrichment and Tehran’s control over the strategic waterway remain major sticking points in the negotiations. This, along with hawkish US Federal Reserve (Fed) expectations, underpin the USD and cap the GBP/USD pair.

Minutes from the April 28–29 FOMC meeting released on Wednesday revealed that a majority policymakers believe that policy firming would likely become appropriate if inflation continued to run persistently above the 2% target. Traders were quick to react and are now pricing in around a 60% chance that the US central bank will raise borrowing costs by the year-end. This, in turn, assists the USD in preserving its recent strong gains to a six-week high and warrants some caution for the GBP/USD bulls.