• GBP/USD is marching towards 1.2050 as the risk-off market mood has lost traction.
• The FOMC minutes will provide detailed guidance on the interest rate policy.
• Preliminary US/UK PMIs are expected to scale down due to higher interest rates.

The GBP/USD pair has printed a fresh day high at 1.2045 in the early London session. The Cable is looking to extend its gains to 1.2050 as the risk-off impulse has faded away despite no negative development on the US-China tensions and three missiles launched by North Korea near Japan’s region.

The US Dollar Index (DXY) has refreshed its day low at 103.52 as investors ignored the fears of persistent inflation and a robust labor market in the United States. S&P500 futures have recovered their entire losses and are looking to shift into a positive trajectory amid the risk appetite theme.

No doubt, the declining trend in the US inflation is still intact as the figures have dropped from their prior numbers. However, the releases of the Consumer Price Index (CPI) and Producer Price Index (PPI) above its estimates have cleared that the battle against inflation is far from over yet. And, the release of the upbeat monthly Retail Sales indicates that consumer spending has recovered vigorously.

Going forward, the release of the Federal Open Market Committee (FOMC) minutes will provide detailed guidance on the interest rate policy ahead.

But before that, the release of the US S&P PMI data will be keenly watched. The preliminary Manufacturing PMI (Feb) is seen lower at 46.8 vs. the prior release of 46.9. And the Services PMI is seen at 46.6 against the former release of 46.8.

Meanwhile, the Pound Sterling remained in action after the United Kingdom's Telegraph reported that UK Prime Minister (PM) Rishi Sunak has been forced to “pause” his Northern Ireland protocol deal amid a backlash from senior Tories and unionists.

Going forward, Tuesday’s S&P PMI (Feb) data will remain in the spotlight. The preliminary Manufacturing PMI is seen lower at 46.8 while the Services PMI is expected to decline to 48.3.