Ella 
GBP/USD extended gains for the second consecutive day, trading around 1.2710 during the Asian session on Monday. A weaker US dollar (USD) provided support for the GBP/USD pair. April data showed U.S. consumer inflation slowed to 0.3%, raising expectations that the Federal Reserve may cut interest rates in 2024. However, the U.S. Federal Reserve remains cautious on inflation and the possibility of a rate cut in 2024.
The odds of the Fed cutting interest rates by 25 basis points in September rose slightly to 49.0% from 48.6% a week ago, according to the CME FedWatch tool. The possibility of central bank easing of monetary policy could weaken the dollar and boost the GBP/USD pair.
Federal Reserve Board of Governors member Michelle Bowman made headlines on Friday when she suggested that progress in inflation may not be as steady as many had hoped. Bowman said the decline in inflation observed in the second half of last year was temporary and there was no further progress in inflation this year. In addition, Richmond Fed President Thomas Barkin noted that inflation is easing, but stressed that it will “take more time” to reach the Fed’s 2% target.
In the UK, investors expect the Bank of England (BOE) to cut interest rates by 60 basis points (bps) in 2024, with the first rate cut expected in August. UK consumer price index (CPI) data for April, due out on Wednesday, is expected to show an annual growth rate of 2.7%, according to FactSet estimates. This data is expected to have a significant impact on Pound Sterling (GBP).
