Ella 
GBP/USD pared intra-day gains, moving higher to 1.2530 in Asia on Monday. The US dollar recovered its daily losses due to risk aversion before the US ISM Manufacturing Purchasing Managers Index (PMI) data was released at the end of the US session, limiting the upward momentum of GBP/USD.
However, the dollar faced headwinds following dovish comments from Federal Reserve (FED) Chairman Jerome Powell on Friday. Powell said recent U.S. inflation data were in line with expectations, supporting the Fed’s stance on possible interest rate cuts throughout 2024. Federal Reserve officials maintained their forecast for three interest rate cuts this year. Market players expect the first rate cut to come at the June meeting.
In February, U.S. core personal consumption expenditures (PCE) increased at a monthly rate of 0.3%, in line with market expectations and slightly lower than the 0.5% increase in January. The annual index rose 2.8%, in line with expectations and slightly lower than the previous reading of 2.9%. U.S. headline PCE (monthly) rose 0.3%, slightly below expectations and down from 0.4% last month. The annual rate of the US PCE price index was 2.5%, in line with expectations.
On the other hand, expectations that the Bank of England (BOE) will initiate three quarterly interest rate cuts in 2024 have put pressure on the pound (GBP). This pressure has been further fueled by recent weak economic data, which suggest the UK economy will slip into recession in the second half of 2023. Bank of England Governor Andrew Bailey added to the pressure by saying he would consider cutting interest rates at a future policy meeting.
