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The GBP/USD pair consolidates its upside around 1.2770 after reaching two-month highs during the early Asian session on Tuesday. The USD Index (DXY) remains under some selling pressure at around 104.60, which provides some support to the major pair. Traders await the US Conference Board’s Consumer Confidence, FHFA’s House Price Index, along with the Fed’s Neel Kashkari, Mary Daly, and Lisa Cook speeches later on Tuesday.
The markets lower their bets on interest rate cuts by the US Federal Reserve (Fed) and see a 49% chance of rate cuts in September, down from 63% recorded a week ago, according to the CME FedWatch tool. The US key data this week might offer some hints about the economic outlook and inflation trajectory. The first reading of US GDP economic growth in the first quarter will be due on Thursday ahead of the US Core Personal Consumption Expenditures Price Index (Core CPE), the Fed’s preferred inflation gauge. The hotter-than-expected US inflation data might lift the Greenback and weigh on the GBP/USD in the near term.
On the other hand, the Pound Sterling (GBP) gains momentum as traders anticipate that the Bank of England (BoE) will maintain its borrowing costs for longer to cool inflation. Citigroup strategist Jamie Searle said that the UK election in July will “further reduce the chance of a near-term BOE cut, adding that it lowers the risk of a later election interfering with the BOE cycle and focusing only on data-dependency.
GBP/USD
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