Anna 
During the early European session on Monday, GBP/USD has managed to break its two-day losing streak, retracing recent losses and edging closer to the 1.2600 mark. The primary driver behind this reversal appears to be the decline in the US Dollar (USD), providing support to the GBP/USD pair.
The dovish sentiment surrounding the Federal Reserve’s stance on interest rates trajectory has led market sentiment to anticipate potential interest rate cuts starting in June, thus exerting downward pressure on the US Dollar.
The US Dollar Index (DXY) has dipped to around 104.30, with the 2-year and 10-year yields on US Treasury bonds holding steady at 4.60% and 4.21%, respectively, at the time of reporting. Despite the uptick in US Treasury yields, the US Dollar (USD) has failed to find support.
Fitch Ratings recently revised the sovereign credit outlook for the United Kingdom to stable from negative, maintaining its sovereign credit rating at AA-. This revision follows the UK economy’s rebound to growth in January, marking a recovery from a shallow recession in the latter half of 2023. The resurgence in retail sales and housing has contributed to this positive development.
UK Retail Sales for February exceeded expectations by remaining flat, surpassing the market consensus of a 0.3% decline. This data point is indicative of a favorable trend for the economy. As market participants await the release of Gross Domestic Product (GDP) data for the fourth quarter of 2023 from both the United Kingdom (UK) and the United States (US) on Thursday, further attention is expected to be drawn to economic indicators impacting currency movements.
