Ella 
GBP/USD was higher for a second straight session on Monday in Asia, trading around 1.2740, close to two-month highs. GBP/USD’s gains can be attributed to the market maintaining risk appetite even as expectations for a rate cut from the Federal Reserve have waned. Notably, UK markets will be closed on Monday for the Spring Bank Holiday and US markets will be closed for the Memorial Day Bank Holiday.
The University of Michigan on Friday released its 5-year consumer inflation forecast for May. The reading edged back to 3.0%, missing expectations of 3.1%. U.S. consumer confidence rose to 69.1 from a preliminary reading of 67.4, but still hit its lowest level in six months. The data could help bolster investor expectations that the Federal Reserve may cut interest rates. This weakens the US dollar and boosts GBP/USD.
The probability of the Fed delivering a quarter-point rate cut in September has fallen to 44.9% from 49.0% a week ago, according to the CME FedWatch tool.
In the UK, traders had priced in lower-than-expected retail sales data released on Friday. In April, retail sales dropped significantly on a monthly basis, recording -2.3%, much lower than the expected -0.4%. Retail sales recorded an annualized rate of -2.7%, compared with expectations of -0.2%. Meanwhile, the GfK consumer confidence index for May was -17, slightly better than expectations of -18 and the previous value of -19.
In addition, the annual rate of British inflation has slowed, gradually approaching the 2% target set by the Bank of England (BOE). The pound could be boosted by a fall in UK inflation, easing investor expectations for a Bank of England interest rate cut in June.
