GBP/USD eases from multi-year high amid thin trading, BoE speeches eyed

• GBP/USD eases to 1.3560 after giving up early gains during the American session.
• Trading volumes remain thin due to UK and US market holidays.
• Focus turns to FOMC Minutes, US Core PCE inflation, and spending data.

The British Pound (GBP) is trading sideways against the US Dollar (USD) after reaching its highest level in three years at the start of this week's session. The GBP/USD pair surged to 1.3593 early in Monday's session. At the time of writing, the pair gave back some of the early gains to trade around 1.3560 during the late American session amid holiday-thinned trading volumes.

The short pullback from the daily high comes as the US Dollar gained some ground on the hopes of easing trade tensions between the US and the EU, with the US Dollar Index (DXY) holding steady near 99.00, recovering from a four-week low.

Last Friday, the US President Donald Trump reignited the trade tensions by threatening to impose a 50% tariff on EU goods starting June 1, citing stalled negotiations and adding to a risk-off mood. However, on Sunday, Trump backed away from this threat, agreeing to extend the deadline back to July 9. Meanwhile, the broad weakness still remains due to the mounting fiscal concerns and cautious Fed tone on the economic outlook.

Despite the easing trade tensions, the British Pound already had bullish tailwinds from stronger-than-expected domestic data from last week. UK Retail Sales rose by 1.2% in April, marking the fourth consecutive monthly increase and highlighting continued consumer resilience in the face of ongoing tax hikes and lingering trade uncertainty. The uptick suggests robust underlying demand in the economy, potentially supporting the Bank of England's (BoE) cautious stance.

On the inflation front, price pressure remains uncomfortably high. Headline inflation accelerated to 3.5% YoY in April, overshooting market expectations and reinforcing concerns that the path toward the BoE's 2% target remains uneven. Core CPI also ticked higher to 3.8%, adding to the case for policymakers to maintain a wait-and-watch approach before committing to any rate cuts.

Looking ahead, with no major economic releases scheduled in the UK this week, the British Pound is likely to take cues from speeches by BoE officials, which could provide fresh insights into the central bank's policy stance.

Huw Pill, BoE Chief Economist, will deliver a keynote speech at the Oesterreichische Nationalbank and SUERF Annual Economics Conference 2025, discussing "Monetary policy: taking a walk on the supply side."

In contrast, the US calendar is more eventful. Key releases include the FOMC Meeting Minutes on Wednesday and the Fed's preferred inflation gauge -- the Core PCE Price Index -- on Friday, alongside personal income and spending data. These figures will be crucial for assessing the Fed's rate path, especially after recent comments suggesting a patient stance on policy easing.