Investors reduce USD positions before May PCE data, expected to show inflation accelerating to a three-year high of 4.1% annually.
The British Pound edges higher against the US Dollar, trading near 1.3200 as markets await the US PCE Price Index. The pair recovered from seven-month lows of 1.3140 but remains below 1.3200, reflecting a 1.6% decline over the past 10 days.
Recent US economic data has reinforced expectations of a hawkish Federal Reserve, while the Bank of England signals steady rates into 2027. May’s PCE data is forecast to show headline inflation at 4.1% year-over-year, up from 3.8% in April, with core inflation rising to 3.4%.
Political uncertainty in the UK, including the resignation of Prime Minister Keir Starmer, has limited GBP gains as investors await clarity on fiscal policy under the next leadership.