GBP/USD was volatile on Monday (24/2), surging to a fresh 10-week high before slumping back to the day's opening bid near 1.2630. Cable failed to reclaim the 1.270 handle, and price action has fallen back below the 200-day Exponential Moving Average (EMA) near 1.2660.

A resurgence in US inflation figures late last week sparked a fresh round of risk aversion. Investors will be focused on the upcoming US Personal Consumption Expenditure (PCE) inflation data due later this week. Traders are hoping that the early-year uptick in key inflation data from the US will recede quickly and not turn into another protracted battle with "transitory" inflation running too hot for the Federal Reserve (Fed) to deliver a rate cut.

Market participants hoping for an increase in the pace of Fed rate cuts in 2025 have been pushed back as US President Donald Trump tries to stoke a global trade war, and a fresh spike in inflation would be the final nail in the coffin for rate cut hopes. President Trump repeated his own threat of steep tariffs on Canada and Mexico on Monday, warning that they would still be in place "next month" after caving in to his own tariff pressures in recent weeks and granting delays to nearly every country he has taunted with import taxes on its own citizens.

Not to be left behind, the Bank of England (BoE) has its own policymakers scheduled to appear regularly this week, although their impact on global markets is likely to remain muted. The BoE has, so far, largely matched market expectations for a rate cut. The BoE's Huw Pill appears on Tuesday, followed by Swati Dinghra on Wednesday and Dave Ramsden on Friday. (Newsmaker23)

Source: FXstreet