• The Pound Sterling trades sideways amid uncertainty over the BoE’s interest-rate outlook.
• BoE officials see expectations of two or three rate cuts for this year as appropriate.
• Investors await the US and UK Manufacturing PMI for fresh guidance on the economic outlook.

The Pound Sterling (GBP) struggles to make a decisive move in Monday’s London session as investors are yet to return to the FX domain after a holiday-stretched weekend on account of Good Friday and Easter Monday. The GBP/USD pair consolidates slightly above the round-level support of 1.2600 as investors await fresh guidance on when the Bank of England (BoE) and the Federal Reserve (Fed) will pivot to rate cuts. 

Earlier this year, the Fed was expected to start reducing interest rates sooner than the BoE, supporting the Pound Sterling’s valuation against the US Dollar. However, the BoE is currently anticipated to follow the Fed’s footprints and start rate cuts from June. Two BoE policymakers, Catherine Mann and Jonathan Haskel, who were described as hawks, see no need for more rate hikes as higher interest rates are impacting labor market conditions and consumer spending.

Catherine Mann said in an interview with Bloomberg last week that she dropped her rate hike call after observing that consumers are reluctant to pay higher prices on services such as travel and hospitality. Mann added that firms are cutting working hours in times when more employment is required. She further added that the number of workers in the labor market will increase due to the government's cuts to social security rates.

The Pound Sterling is expected to depreciate if the BoE reduces key borrowing rates earlier than expected after consistently raising them for more than two years.

Meanwhile, the US Dollar Index (DXY) is broadly sideways around 104.50 as investors await the crucial United States Nonfarm Payrolls (NFP) report for March, which will be published on Friday. The official labor market data is one of the main economic data releases that influences the Fed’s rate cut expectations.