Ella 
Market risk appetite improved during the Asian session on Tuesday, with GBP/USD hovering around 1.2560. Higher-than-expected UK gross domestic product (GDP) data released on Friday provided support for the pound (GBP). Britain’s economy grew 0.6% in the first quarter, beating forecasts and marking the end of Britain’s brief recession. The strong economic rebound is the strongest growth in more than two years.
For now, focus turns to employment data later in the day. Jobless claims are expected to increase in April. In addition, the International Labor Organization unemployment rate (3M) is expected to show a rise in the number of unemployed people in the UK.
The U.S. Dollar Index (DXY), which measures the U.S. dollar (USD) against six major currencies, rose on cautious statements from Federal Reserve (Fed) officials. Fed officials stressed that given high inflation, interest rates must be maintained at a high level for a long time. Fed Vice Chairman Philip Jefferson reiterated that stance on Monday, arguing for keeping interest rates on hold until there are signs of easing inflation.
A consumer expectations survey conducted by the New York Federal Reserve Bank showed that U.S. consumers expect inflation to generally accelerate next year. Consumers’ one-year inflation expectations rose to 3.3% from 3.0% in March.
Investors are closely watching Tuesday’s Producer Price Index (PPI), a key economic indicator. The producer price index can have a significant impact on the market and act as a catalyst. Traders may use PPI data to assess the likely state of the CPI. If the producer price index beats expectations, the dollar could strengthen further.
