Anna 
During Monday’s European session, the Pound Sterling (GBP) clings to gains, trading around 1.2670, as investors factor in expectations that the Bank of England (BoE) is unlikely to lower interest rates in the near future. The United Kingdom’s (UK) inflation rate, currently the highest among the Group of Seven economies (G-7), compels BoE policymakers to maintain interest rates in restrictive territory for an extended duration.
The robust wage growth, particularly influential in the services sector, has contributed to the resilience of the UK’s core Consumer Price Index (CPI). BoE policymakers assert that the rate at which labor costs and service inflation are growing is double the pace necessary for inflation to sustainably return to the 2% target.
The prospects of higher interest rates in the UK are viewed favorably for the Pound Sterling, as this tends to attract increased foreign inflows.
With a relatively light economic calendar in the UK this week, market sentiment is expected to play a significant role in guiding the GBP/USD pair. In the United States, Federal Reserve (Fed) Chair Jerome Powell’s congressional testimony and the upcoming Nonfarm Payrolls (NFP) data will likely influence market sentiment, providing fresh insights into when the Fed might initiate interest rate reductions. These developments create an environment where investors closely monitor central bank actions and economic indicators, impacting the Pound Sterling’s trajectory against the US Dollar.
