Ella 
In early Asian trading on Tuesday, GBP/USD consolidated its gains around 1.2560. A weaker US dollar (USD) has provided some support for GBP/USD amid stronger appetite for risk assets. Investors will be closely watching the UK job market, Bank of England Governor Peel’s speech and US Producer Price Index (PPI) data due later on Tuesday.
Several Federal Reserve (Fed) officials have stressed the need to keep interest rates higher for longer as inflation remains elevated. Federal Reserve Vice Chairman Philip Jefferson on Monday became the latest Fed official to call for keeping interest rates at current levels until inflation shows more signs of easing. Jefferson said he would continue to seek more evidence that inflation would return to his 2% target.
Financial markets have priced in a June rate cut to nearly 5% from 10%, while pricing in a September rate cut has also dropped to 75% from nearly 90% at the beginning of last week. Fed officials maintaining a cautious tone may boost the dollar in the short term and limit the upside for GBP/USD.
On the other hand, there is growing speculation that the Bank of England (BOE) will start cutting interest rates in the summer, with traders expecting the Bank of England to cut interest rates by 25 basis points in August and by 50 basis points overall in 2024. Bank of England Governor Andrew Bailey said at a press conference that he would pay attention to upcoming data before deciding to cut interest rates. UK employment data for April may provide some clues about the economic situation and further monetary policy. If the employment data comes in higher than expected, it could put pressure on GBP (GBP) and be bearish for GBP/USD.
