- GBP/USD inches higher possibly driven by improved risk appetite on Monday.
- BoE’s Chief Economist Huw Pill indicated a growing belief that rate cuts might be on the horizon.
- The US Dollar struggled as the US Consumer Sentiment Index dropped to 67.4 in May, marking a six-month low.
GBP/USD edges higher to near 1.2520 during the Asian session on Monday, possibly due to improved risk appetite. The Pound Sterling (GBP) was bolstered by releasing higher-than-expected UK Gross Domestic Product (GDP) figures on Friday. The UK economy expanded by 0.6% in Q1, surpassing forecasts and signaling the end of the nation's brief recession. This economic rebound represented the most robust growth seen in over two years.
However, the British Pound faced a challenge following dovish remarks from Huw Pill, Chief Economist at the Bank of England (BoE). Pill echoed the sentiment of the majority of the BoE's Monetary Policy Committee (MPC), who opted to maintain interest rates at 5.25% on Thursday. Yet, he subsequently expressed a growing belief that rate cuts could be imminent.
The market participants are likely to await the employment data from the United Kingdom (UK) on Tuesday with expectations of Claimant Count Change showing an increase in the number of those claiming jobless benefits in April. Additionally, the ILO Unemployment Rate (3M) is expected to show an increase in number of unemployed workers in the UK.
This week, investors in the United States (US) are poised to focus on key economic indicators for potential market drivers, including the Consumer Price Index (CPI), Producer Price Index (PPI), and Retail Sales.
On Friday, the US Dollar (USD) encountered challenges following the release of the University of Michigan Consumer Sentiment Index, which dropped to 67.4 in May from April's 77.2, marking a six-month low and falling short of market expectations of 76 reading.
However, the extent of these losses may have been curbed by an uptick in inflation expectations for the year ahead, with a reading of 3.5%, the highest in six months compared to April's 3.2%. Additionally, the five-year inflation outlook rose to 3.1%, a six-month high, up from 3.0% previously. These inflation indicators might have supported the US Treasury yields to advance, potentially lending support to the Greenback.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD holds steady above 1.0850 post-Lagarde
EUR/USD holds steady above 1.0850 after rising above 1.0900 earlier in the day. The European Central Bank reduced key rates by 25 bps as expected but ECB President Lagarde refrained from committing to further easing, making it difficult for the Euro to gather strength.
GBP/USD retreats from daily highs, trades below 1.2800
GBP/USD edges lower in the American session on Thursday and trades in negative territory below 1.2800. The cautious market mood helps the US Dollar hold its ground and doesn't allow the pair to stretch higher.
Gold aiming to retest the $2,400 mark
Gold prices extend further their weekly rebound and flirt with the $2,380 zone, or two-week highs, on the back of the lacklustre performance of the Greenback, small gains in US yields, and rising speculation of interest rate cuts by the Fed after the summer.
Shiba Inu price likely to rise as whales accumulate
Shiba Inu price consolidation could end soon, as signaled by increased activity among previously dormant wallets and significant accumulation by whales. This surge in demand could potentially trigger a rally for SHIB.
The ECB starts cuts earlier and may move faster than the Fed
The European Central Bank cut all three of its key interest rates by 25 points, which is in line with market expectations. The ECB has kept rates unchanged for the past nine months and tightened policy from July 2022 to September 2023.