GBP/USD consolidates above 1.2600 on hawkish BoE members, awaits US data

• GBP/USD extends gains on growing speculation that the Fed has concluded the rate-hike cycle.

• Pound Sterling could gain further on hawkish remarks from BoE Governor Andrew Bailey.

• UK chief policymaker emphasized that it is too early to discuss interest rate cuts.

GBP/USD hovered around 1.2610 during the European session on Monday. Weakness in the US Dollar (USD), driven by growing speculation that the Federal Reserve has completed its interest rate hike, worked in favor of the Pound Sterling (GBP).

In addition, the cable pair could get an additional boost due to dovish comments from Bank of England (BoE) Governor Andrew Bailey. In an interview on Monday, Bailey opined that “getting inflation down to 2% will be a difficult task” and stressed that it was premature to discuss rate cuts. He also expressed concern about the slowdown in the supply side of the economy.

BoE chief economist Huw Pill recently expressed the central bank’s commitment to maintaining a strong stance against inflation. Peel stressed that the BoE could not afford to relax tight monetary policy.

US Dollar Index (DXY) faces challenges despite improving US Treasury yields. Although there has been speculation about the possibility of easing, Federal Reserve (Fed) officials have emphasized the importance of further tightening. Their strong position signals a dedication to carefully evaluating incoming data before making any policy decisions.

Market participants appear to be proceeding cautiously ahead of a series of key economic readings from the United States (US). The upcoming data, including annual gross domestic product (GDP) and the core inflation index, the core personal consumption (PCE) price index, for the third quarter are expected to provide a comprehensive view of the country’s economic performance.