- 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 extends slide below 1.0700 on stronger USD, EU political angst
EUR/USD stays under bearish pressure and trades at its lowest level since early May below 1.0700. Unabated US Dollar demand amid risk aversion and looming EU political uncertainty exert downside pressure on the pair heading into the weekend.
GBP/USD slumps to multi-week lows below 1.2700
GBP/USD extends its decline on Friday and trades at its lowest level in nearly a month below 1.2700. In the absence of high-tier data releases, the US Dollar continues to benefit from souring market mood, forcing the pair to stretch lower in the second half of the day.
Gold clings to recovery gains at around $2,330
Following Thursday's pullback, Gold holds its ground on Friday and trades in positive territory near $2,330. The benchmark 10-year US Treasury bond yield edges lower toward 4.2%, helping XAU/USD push higher ahead of the weekend.
Monero price poised for a downward correction
Monero price has encountered resistance at a critical level. The technical outlook suggests a potential short-term correction as momentum indicators signal a bearish divergence.
Week ahead – RBA, SNB and BoE next to decide, CPI and PMI data also on tap
It will be another central-bank-heavy week with the RBA, SNB and BoE. Retail sales will be the highlight in the United States. Plenty of other data also on the way, including flash PMIs and UK CPI.