• The Pound Sterling remains vulnerable around 1.2670 as investors turn cautious ahead of the UK inflation for May and the BoE’s policy outcome.
• UK’s headline inflation is expected to come lower at the central bank’s target of 2%.
• Fed’s Kashkari sees only one rate-cut move this year despite progress in disinflation has resumed.

The Pound Sterling (GBP) continues its losing streak for the third trading day against the US Dollar (USD) on Monday. The GBP/USD pair hovers near a monthly low at around 1.2670 as the Federal Reserve’s (Fed) hawkish outlook on interest rates keeps the US Dollar’s appeal firm.

This weekend, Minneapolis Fed Bank President Neel Kashkari said in an interview with CBS that it's a "reasonable prediction" that the United States (US) central bank will cut interest rates once this year, waiting until December to do it.

Contrary to the Fed’s support for reducing interest rates only once this year, financial markets speculate that the Fed will deliver two rate cuts and start unwinding its restrictive policy framework from the September meeting, with subsequent rate cuts in the November or December meeting. The soft US Consumer Price Index (CPI) and Producer Price Index (PPI) reports for May have prompted higher expectations for early rate cuts.

On Friday, Chicago Fed Bank President Austan Goolsbee acknowledged that cooler consumer and producer inflation reports for May had relieved him. However, he wants to see similar data for months before lowering interest rates. Goolsbee advocated for reducing interest rates only once this year.