Ella 
In Asia on Monday, GBP/USD fluctuated higher to around 1.2520, possibly due to improved risk appetite. Higher-than-expected UK gross domestic product (GDP) data released on Friday provided support for the pound. Britain’s economy grew 0.6% in the first quarter, beating forecasts and signaling the end of Britain’s brief recession. The economic rebound recorded the strongest growth in more than two years.
However, the pound faces challenges following dovish comments from Bank of England (BOE) chief economist Hugh Peel. Peel agreed with the majority of the Bank of England’s Monetary Policy Committee (MPC) on Thursday in favor of keeping interest rates at 5.25%. However, he later expressed growing confidence that a rate cut may be imminent.
Market participants are likely to await UK employment data released on Tuesday, which is expected to see an increase in the number of jobless claims in April. In addition, the UK unemployment rate in March – expected to show an increase in the number of unemployed people in the UK by ILO standards.
This week, United States (US) investors will focus on key economic indicators for underlying market drivers, including the Consumer Price Index (CPI), Producer Price Index (PPI) and retail sales.
The dollar came under pressure after the University of Michigan’s May consumer confidence index fell to 67.4 in May from 77.2 in April on Friday, hitting a six-month low and below market expectations of 76.
However, the magnitude of these losses may have been capped by a pickup in inflation expectations for the year ahead, which recorded 3.5%, the highest level in six months, compared with 3.2% in April. Additionally, five-year inflation expectations rose to 3.1% from 3.0% previously, a six-month high. These inflation measures may support a rise in U.S. Treasury yields, providing support for the dollar.
