GBP/USD Braces For Fresh Round Of UK Inflation Data

GBP/USD is fluctuating around the 1.2700 mark as the market prepares for Wednesday, when the US is on holiday and will release a new round of UK CPI. Later this week, the Bank of England (BOE) will announce another interest rate decision, followed by frequent economic events on Friday, with UK retail sales, UK Purchasing Managers Index (PMI) and US Purchasing Managers Index (PMI) to round out this week’s trading.

On Tuesday, Fed officials will give speeches, emphasizing that the Fed maintains a cautious stance, and policymakers continue to wait for further evidence of cooling inflation before announcing interest rate decisions.

Fed officials tend to be cautious, and policymakers are waiting for further signs of easing

UK inflation is expected to rise 0.4% month-on-month in May, from 0.3% in the previous month. At the same time, UK CPI inflation is expected to fall back to 3.5% year-on-year, from 3.9% in the previous month. The US market holiday will make market liquidity light on Wednesday, and US trading markets will be closed to celebrate the Children’s Day holiday.

The Bank of England is about to hold a new round of interest rate meetings on Thursday. The Bank of England is widely expected to keep interest rates at 5.25%, with seven Monetary Policy Committee (MPC) members expected to vote to keep rates unchanged for now. Two MPC members are expected to vote in favor of a 25 basis point rate cut, in line with the vote at the last meeting.

Friday will end the trading week with frequent economic events, with the release of UK Retail Sales, UK PMI and US PMI. UK Retail Sales are expected to rebound to 1.5% on month in May, compared to -2.3% in the previous month.

The UK Manufacturing PMI (PMI) released on Friday is expected to be 51.0, slightly lower than the previous value of 51.2, while the UK Services PMI (PMI) is expected to rise slightly from 52.9 to 53.0. For the US, both the manufacturing and services PMIs are expected to fall, with the manufacturing PMI expected to fall from 51.3 to 51.0 and the services PMI expected to fall from 54.8 to 53.3.

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