Expectations that more sustained price pressure in the UK may compel the BoE to hold interest rates at their current level for a little while longer provided support for the British Pound’s positive start to the week. Nevertheless, the ambiguity surrounding the July 4th general election in the UK is preventing the GBP bulls from making bold wagers and limiting future gains.

This morning, the Euro was comparatively flat, consolidating after Friday’s robust recovery on the back of higher-than-expected inflation statistics. The ECB may decide to pause rate reductions in July and to reduce them more gradually in the following months, even though the Eurozone’s latest readings may not prevent them from happening this week. Financial markets have actually factored in rate cuts from the ECB of almost 25 basis points in June and 57 basis points in 2024.

In overnight trading, the US dollar continued to decline after suffering significant losses on Friday. The US dollar saw losses in April as projected, albeit modest, inflation decreased. Some speculated that the Fed might start lowering rates in September after seeing the report. Indeed, it was observed that investors were pricing in a 47% chance of a 25-basis point decrease and a 45% chance of a hold.

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