• The Pound Sterling consolidates as investors seek fresh guidance on interest rates.
• UK Retail Sales for food items rose sharply in March due to early Easter while overall demand remains subdued.
• The US inflation data for March will guide expectations for Fed rate cuts in June.

The Pound Sterling (GBP) is stuck in a tight range around 1.2660 against the US Dollar in Tuesday’s London session. The GBP/USD pair trades sideways as investors shift focus to the United States Consumer Price Index (CPI) data for March, to be published on Wednesday, which will likely provide some clues about when the Federal Reserve (Fed) could start reducing interest rates.

The US Dollar juggles in a narrow range as well ahead of the inflation data. The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, trades slightly above 104.00.

Meanwhile, the appeal for the Pound Sterling slightly improves as surveys show that the United Kingdom economy will deliver modest growth this year after falling to a technical recession in the second half of 2023. The latest projections from the UK Office for Budget Responsibility (OBR) showed that the economy is forecast to grow by 0.8% this year. Domestic demand has rebounded while geopolitical tensions remain a major concern, resulting in supply chain disruptions, the OBR report said.

This week, investors will focus on the UK monthly Gross Domestic Product (GDP) and the factory data for February, which will be published on Friday. The data will give a snapshot of the state of the economy after the 0.2% GDP expansion registered in January. The breakdown among sectors will also provide data from the country’s manufacturing sector, which is considered a leading indicator for overall demand.