The British pound (GBP) turned sideways after a strong rally in more than a month around 1.2900 against the US dollar (USD) in European trading hours on Tuesday (3/11). The GBP/USD pair traded firm as the US Dollar Index (DXY), which tracks the greenback against a basket of six major currencies, struggled above a four-month low of 103.45 ahead of the US Consumer Price Index (CPI) data for February, due for release on Wednesday.

Investors will be watching the US inflation data as it will influence market speculation over the Federal Reserve's (Fed) monetary policy outlook. Year-on-year headline inflation is expected to grow by 2.9%, slower than 3% in January. In the same period, core CPI – which excludes volatile food and energy prices – is expected to slow to 3.2% from the previous reading of 3.3%.

Of late, traders have raised bets in favor of the Fed starting to cut interest rates in May amid concerns about an economic slowdown led by US President Donald Trump's tariff agenda. According to the CME FedWatch tool, the probability of the Fed cutting rates in May has increased to 51% from 37% a day ago.

However, several Fed officials, including Chairman Jerome Powell, have been guiding a "wait and see" approach amid a lack of clarity on President Donald Trump's tariff and tax policies. On Friday, Jerome Powell said, "Uncertainty about the Trump administration's policies and their economic impacts remains high, and the net impact of trade, immigration, fiscal, and regulatory policies is what matters to the economy and monetary policy."

On Tuesday, investors will focus on the US JOLTS Job Openings data for January, due out at 14:00 GMT. US employers are expected to have added 7.75 million new jobs, slightly higher than the 7.6 million seen in December. (Newsmaker23)

Source: FXstreet