POUND STERLING HOVERS AROUND MONTHLY LOWS ON DISMAL MARKET SENTIMENT

• The Pound Sterling dips as investors expect the BoE to cut rates sooner than expected.
• BoE Bailey said market expectations for two or three rate cuts this year are not unreasonable.
• The main event for this week will be the US core PCE price index data for February.

The Pound Sterling (GBP) falls to 1.2600 in Wednesday’s European session as investors expect that the Bank of England (BoE) will start reducing interest rates sooner than previously anticipated. To a certain extent, the BoE has turned dovish on the interest rate outlook as the United Kingdom’s inflation is softening.

In a recent interview with the Financial Times, BoE Governor Andrew Bailey said market expectations for rate cuts this year are not unreasonable. About the inflation outlook, Bailey said "We are not seeing a lot of sticky persistence."

The GBP/USD faces downside pressure from dismal market sentiment. Investors turn cautious ahead of the United States core Personal Consumption Expenditure price index (PCE) data for February, which will be published on Good Friday. The US Dollar Index (DXY), which values the Greenback against six foreign currencies, rises to 104.40.