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The GBP/USD pair has consolidated its gains above 1.2580 during the early Asian session, with the major pair holding above the key 100-day Exponential Moving Average (EMA) but still capped under the 1.2600 hurdle.
The US Consumer Price Index and Retail Sales report for April will be in the spotlight, with the Fed’s Kashkari and Bowman due to speak. The US PPI reached its highest rate in a year in April, rising by 2.2% YoY compared to the 1.8% increase recorded in March.
The Core PPI, which excludes food and energy costs, climbed 2.4% YoY in the same period, matching the expectation. On a monthly basis, both the PPI and core PPI both rose 0.5% MoM in April.
The Fed said that the April PPI provides more justification to keep rates higher for longer, but it does not necessarily mean the Fed will need to hike again. Cleveland Fed President Loretta Mester stated that she would still like the central bank to start tapering asset purchases this year, adding that the Fed is in a “really good place” to study the economy before charting the rate path.
Investors await the US CPI inflation data on Wednesday for fresh impetus, as the hotter-than-expected inflation reading could dampen hope for a Fed rate cut this year and boost the Greenback against the Pound Sterling (GBP). UK employment reports showed signs of cooling, prompting the expectation that the Bank of England (BoE) might cut interest rates in the coming months.
