In the early Asian session on Monday, GBP/USD rose to 1.2655 as the US Dollar weakened due to softer US PCE inflation data. This data raised speculation that the Fed may cut interest rates this year. Traders are now waiting for the US June ISM Purchasing Managers Index for further direction.
The US core PCE inflation measure for May cooled, with the figure matching forecasts. Fed officials have indicated a willingness to cut rates if inflation remains stubborn. Meanwhile, the UK general election on Thursday may bring volatility to the GBP/USD pair, with the Opposition Labor Party expected to win over the Conservative Party led by UK Prime Minister Rishi Sunak.
The Pound Sterling (GBP) is the oldest currency in the world and the official currency of the United Kingdom. It is the fourth most traded currency in the world, with key trading pairs including GBP/USD, GBP/JPY, and EUR/GBP. The value of the Pound Sterling is influenced by monetary policy decisions by the Bank of England, as well as economic indicators such as GDP, manufacturing and services PMIs, and employment data. Additionally, the Trade Balance indicator plays a significant role in determining the strength of the Pound Sterling based on a country’s exports and imports.