The Pound Sterling moves higher against the US Dollar as the Fed is expected to begin reducing interest rates in September.
UK annual headline inflation has returned to the desired rate of 2%.
Investors await the US ISM Manufacturing PMI for fresh guidance on interest rates.
The Pound Sterling (GBP) performs strongly against its major peers in Monday’s London session. The British currency strengthens as investors remain uncertain about when the Bank of England (BoE) will start reducing interest rates.
Headline inflation in the United Kingdom (UK) has already returned to the desired rate of 2%. However, BoE policymakers see price pressures in the service sector as a preferred inflation measure, which is significantly higher than what is needed to gain confidence for rate cuts.
Currently, financial markets expect that the BoE will begin lowering interest rates from the August meeting.
Meanwhile, the Pound Sterling is expected to remain uncertain ahead of the UK elections outcome, which will kick off on July 4. According to the latest exit polls, the opposition Labor Party is expected to win from UK Prime Minister Rishi Sunak-led Conservative Party.
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