The GBP/USD pair appears susceptible above the immediate support level of 1.2420 during the early European session. The Cable is facing challenges in defending its closest cushion as market participants eagerly anticipate a speech by Bank of England (BoE) Governor Andrew Bailey.
In the Asian markets, S&P500 futures are maintaining half of the gains achieved, indicating a mildly positive market sentiment. The US Dollar Index (DXY) is encountering resistance above 103.30, with limited upside potential due to the ongoing delay in US debt-ceiling concerns.
On the other hand, hawkish comments from Federal Reserve (Fed) policymakers are providing support on the downside.
The US Dollar Index (DXY) is expected to remain cautious ahead of the preliminary S&P PMI figures for May. The Manufacturing PMI is anticipated to decline to 50.0 from the previous release of 50.2, while the Services PMI is projected to remain stable at 53.6. A consecutive Manufacturing PMI above 50.0 would suggest a recovery in the manufacturing sector.
In terms of the Pound Sterling, investors are eagerly awaiting the release of the United Kingdom’s Consumer Price Index (CPI) data. According to the preliminary report, the headline UK Consumer Price Index is expected to be at 8.3%, significantly lower than the previous release of 10.1% on an annual basis.
The monthly headline CPI has exhibited steady growth at 0.8%. Core CPI, which excludes the impact of oil and food prices, is forecasted to remain unchanged at 6.2%.
Looking ahead, the speech by BoE’s Andrew Bailey will play a crucial role. Bailey’s speech is anticipated to provide guidance on interest rates for the upcoming monetary policy meeting scheduled for June.
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