• The Pound Sterling consolidates, although easing UK inflation keeps its broader appeal weak.
• UK’s shop price inflation grew 1.3% in March, the slowest pace since December 2021.
• Easing Fed rate cut bets for June have dented market sentiment.

The Pound Sterling (GBP) trades in a narrow range near a six-week low around 1.2540 in Tuesday’s London session. The broader appeal of the GBP/USD pair is poor, mainly due to weak market sentiment. The near-term outlook of the Cable is downbeat as traders push back prospects for the Federal Reserve’s (Fed) first rate cut, which is expected in the June meeting, after keeping them higher for more than two years. The prospect of interest rates remaining higher for longer than anticipated benefits the US Dollar and weighs on the pair.

The robust recovery in the United States manufacturing sector, which exhibits a strong economic outlook, forced traders to roll back their bets on rate cuts by June. Higher demand for the US manufacturing sector indicates solid household spending, allowing Fed policymakers to avoid rushing for interest rate cuts. Upbeat economic prospects buy significant time for the Fed to observe more inflation data before jumping on rate cuts. 

Cautious market sentiment weighs heavily on the Pound Sterling. On the contrary, the US Dollar Index (DXY) prints a fresh four-month high slightly above 105.00 amid a cheerful safe-haven bid and good prospects for the US economy. More uncertainty is anticipated in global markets as the US Bureau of Labor Statistics (BLS) will report the Nonfarm Payrolls (NFP) data for March on Friday. But before that, investors will focus on the US JOLTS Job Openings data for February, which will be published at 14:00 GMT.