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GBP/USD takes advantage of the US Dollar's retracement to regain upside momentum, following a negative start to the week, as it retests its intraday high near 1.2450 in the early hours of Tuesday. In doing so, Cable also gains from the hawkish expectations encircling the Bank of England (BoE) in the face of inflation fears.

During the most recent negotiations, US President Joe Biden and House Speaker Kevin McCarthy were unable to reach an agreement to prevent the debt ceiling from expiring. However, policymakers continue to hold out optimism that an agreement can be reached to avert a U.S. default. "I just concluded a productive meeting with Speaker McCarthy about the need to prevent a default," said US Vice President Joe Biden, according to White House statements shared with Reuters late on Monday. On the other hand, McCarthy stated that the meeting with Biden was productive, but no agreement was reached regarding the debt ceiling.

On the other hand, the Financial Times (FT) cites the most recent Ipsos Mori survey of 29 countries worldwide to state, "People in the United Kingdom are among the least confident that the financial authorities will quickly bring inflation under control." Previously, the Pound Sterling was weighed down by the BoE policymakers' expectations of easing inflation as well as hawkish Fed discussions.

Neel Kashkari, president of the Federal Reserve Bank of Minneapolis, favored the rate rise trajectory while citing fears of a US default and banking crisis, which allowed the US dollar to remain stronger. In the same vein, James Bullard, president of the Federal Reserve Bank of St. Louis, dismissed recession fears on Monday while predicting two more rate hikes this year before reaching the base rate. In addition, Atlanta Fed President Raphael Bostic, Richmond Fed President Thomas Barkin, and San Francisco Fed President Mary C Daly have all recently supported the demands for higher interest rates.

Aside from the United States, market sentiment remains jittery due to US default concerns and US-China tension. The S&P500 Futures record modest gains while tracking Wall Street's performance, whereas US Treasury bond yields take a respite at the multi-day peak.

The first readings of the UK's S&P Global/CIPS PMIs for the month of May will precede the US's S&P Global PMIs for the same month in order to influence intraday price movements. On Wednesday, however, the aforementioned risk catalysts and the UK inflation data will garner the most attention.

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