The GBP/USD pair rallies to near 1.3400 during European trading hours on Monday, the highest level seen in seven months.

The Cable strengthens as the US Dollar (USD) has been battered by the threat to the Federal Reserve's (Fed) independence after United States (US) President Donald Trump.

The US Dollar Index (DXY), which tracks the Greenback's value against six major currencies, is down over 1% to a fresh three-year low near 98.00.

Donald Trump has slammed Fed Powell for continuing to support a "wait and see" approach on the monetary policy until getting greater clarity over how the new tariff policy will shape the economic outlook. Trump has expressed dissatisfaction over Powell's stance on the monetary policy outlook and has signalled that he can remove him at any time.

The Fed really owes it to the American people to get interest rates down. That's the only thing he's good for," Trump said. "I am not happy with him. If I want him out of there, he'll be out real fast, believe me." Trump said on Friday.

Meanwhile, trade tensions due to the announcement of reciprocal tariffs by US President Donald Trump have kept the US Dollar on the backfoot for the last three months. Despite Trump's announcement of a 90-day pause on the imposition of reciprocal levies, the uncertainty over the global economic outlook, including the US, remains intact.

In the United Kingdom (UK) region, soft Consumer Price Index (CPI) data for March and global uncertainty have paved the way for an interest rate cut by the Bank of England (BoE) in May's policy meeting. Such a scenario will be unfavorable for the Pound Sterling (GBP).

 In the Financial Policy Committee (FPC) of the current month, the BoE warned that a major shift in "global trading arrangements" could harm "financial stability by depressing growth".

This week, investors will focus on the preliminary S&P Global/CIPS Purchasing Managers' Index (PMI) data for April and the Retail Sales data for March, which will be released on Wednesday and Friday.

Source: FXStreet