- GBP/USD gained ground on risk-on sentiment ahead of US consumer prices.
- CME FedWatch Tool suggests the likelihood of a Fed rate cut in June has decreased to 51.1%.
- BRC Like-For-Like Retail Sales grew by 3.2% YoY in March, marking the strongest growth since August 2023.
GBP/USD holds ground in the positive territory, hovering around 1.2650 during the Asian session on Tuesday. The pair gained ground on improved risk appetite ahead of Consumer Price Index data scheduled on Wednesday.
The US Dollar (USD) faces challenges amid market fluctuations, influenced by the cautious stance of the Federal Reserve. According to the CME FedWatch Tool, the probability of a 25-basis point rate cut by the Fed in June has decreased to 51.1%.
Federal Reserve (Fed) Bank of Minneapolis President Neel Kashkari emphasized the significance of the central bank's dedication to tackling inflation. He stressed that despite the current inflation rate hovering around 3%, the Fed must work towards bringing it back down to the target level of 2%.
In contrast, Chicago Fed President Austan Goolsbee offered a different perspective on Monday, stating that the economy is on a golden path. He emphasized that the economy remains robust due to a tight labor market.
On the other side, BRC Like-For-Like Retail Sales in the United Kingdom (UK) surged by 3.2% year-over-year in March, against the expected increase of 1.8% and 1.0% prior. This has marked the strongest growth since August 2023. This boost was largely attributed to an early Easter period, which led to increased food sales ahead of the extended weekend.
Moving forward, the Pound Sterling (GBP) could be influenced by the release of monthly Gross Domestic Product (GDP) and factory data for February, scheduled for publication on Friday. Bank of England Governor Andrew Bailey is expected to appear on Tuesday. However, he may not delve much into discussions regarding the economy or policy during this session.
Furthermore, investor expectations regarding the Bank of England (BoE) initiating interest rate reductions from the June meeting have intensified recently, spurred by mounting indications of easing price pressures.
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