• The Pound Sterling struggles near 1.2700 against the US Dollar amid uncertainty ahead of the UK inflation and the BoE interest rate policy.
• The UK headline CPI is expected to have decelerated to the bank’s target of 2% in May.
• Fed’s Harker sees only one rate cut this year if his economic forecast plays out.

The Pound Sterling (GBP) faces selling pressure in an attempt to extend recovery above the round-level resistance of 1.2700 against the US Dollar (USD) in Tuesday’s London session. The GBP/USD pair edges down as the US Dollar rebounds after a modest correction from a six-week high. The US Dollar Index (DXY), which tracks the greenback’s value against six major currencies, holds gains above 105.00 as Federal Reserve (Fed) officials continue to argue in favor of cutting interest rates only once this year.

Fed policymakers want to see inflation decline for months to gain confidence in lowering interest rates. They remain concerned over a reacceleration in price pressures due to premature rate cuts even though the progress in the disinflation process has resumed after stalling in the first quarter of the year.

On Monday, Philadelphia Fed Bank President Patrick Harker emphasized keeping rates unchanged for now to maintain downward pressure on inflation in various sectors such as housing and services, notably auto insurance and repairs. On the interest rate outlook, Harker sees one cut in benchmark rates this year if his economic forecast plays out, Reuters reported.

On the economic front, investors will focus on the monthly United States (US) Retail Sales data for May, which will be published at 12:30 GMT. The Retail Sales data, a close measure of consumer spending that provides cues on the inflation outlook, is estimated to have increased by 0.3% after remaining flat in April.