Sterling fell in European trade on Tuesday against a basket of major rivals, on track for the first loss in six days against the dollar away from three-week highs on profit-taking.

There are no important UK data this week that could change the odds of future UK interest rates, with investors focusing on US data released this week.

GBP/USD

GBP/USD fell 0.1% to 1.2674, with a session-high at 1.2688, after closing up 0.1% on Monday, the fifth profit in a row, hitting a three-week high at 1.2710.

UK Rates

Recent UK and inflation data is pointing to a likely UK rate cut in May, skipping March and April.

Theres less than a 15% chance for a Bank of England interest rate cut in March, with an over 50% chance for such a cut in May.

Traders now expect 71 basis points on average in UK rate cuts this year, down from 134 basis points in previous forecasts.

Bailey

Bank of England Governor Andrew Bailey said in recent remarks the BOE might not wait for 2% inflation before cutting interest rates, noting that the UK economy has already exited its recession.

US Rates

Markets are now expecting a 2.5% chance for a Federal Reserve March rate cut, and a 20% chance for a May rate cut, and a 64% chance for a June cut.

Now investors are waiting for a basket of important US data later this week, including GDP growth, unemployment claims and personal spending data, to gauge the likely path ahead for policies.