• The Pound Sterling finds support near 1.2620 against the US Dollar.
• UK’s economic outlook appears to be uncertain ahead of UK elections.
• The BoE is expected to start lowering interest rates in August.

The Pound Sterling (GBP) gains ground against the US Dollar (USD) and trades around 1.2650 in Monday’s London session after facing a sharp sell-off last week. The GBP/USD pair rebounds as the upside move in the US Dollar Index (DXY), which tracks the Greenback’s value against six major peers, appears to have paused and struggles to extend upside above the immediate resistance of 106.00.

However, the near-term outlook of the US Dollar has strengthened after the preliminary S&P Global Purchasing Managers Index (PMI) report for June showed that activities in the manufacturing and the service sector surprisingly expanded at a faster pace than expected. The report showed that the Composite PMI surprisingly jumped to 51.7. Investors expected the PMI data to decline to 51.0 from the prior release of 51.3.

The report also lifted the mood of Federal Reserve (Fed) policymakers as it said, “Selling price inflation has meanwhile cooled again after ticking higher in May, down to one of the lowest levels seen over the past four years. Historical comparisons indicate that the latest decline brings the survey’s price gauge into line with the Fed’s 2% inflation target.”