GBP/USD rebounds to near 1.1100 as risk-on mood emerges, US inflation buzz

• GBP/USD has sensed a decent buying interest at around 1.1020 as the risk-off mood has started fading away.
• Fed policymaker sees no improvement in real GDP growth later this year.
• The US core CPI seems a major concern for the Fed.

The GBP/USD pair has displayed a sheer pullback move after dropping to near 1.1019 in the Tokyo session. The cable has recovered to near 1.1100 and is expected to extend its recovery amid an improvement in the risk appetite of the market participants. S&P500 futures have turned into the green after picking a decent demand.

Meanwhile, the US dollar index (DXY) is oscillating near the round-level cushion of 113.00 and may deliver a downside break as the risk-off impulse has started fading away. The commentary from Federal Reserve (Fed) Vice Chair Lael Brainard at Monday's National Association for Business Economics conference, citing economic prospects has impacted the DXY’s rally.

Fed policymaker stated that the policy tightening measures have started displaying their multiplier effects. She further cited that "Output has decelerated so far this year by more than anticipated, suggesting that policy tightening is having some effect" in sectors like real estate, which are directly tied to borrowing costs for home mortgages. Fed policymaker sees no growth in real Gross Domestic Product (GDP) growth later this year.

This week, the US Consumer Price Index (CPI) data will keep investors on their toes. The headline inflation figure is expected to decline to 8.1% while the core CPI is seen higher at 6.5%. The core CPI data has not shown any serious response to the accelerating interest rates by the Federal Reserve (Fed). Therefore, a higher-than-expected inflation rate could force the Fed to go full-armed against mounting price pressures.

On the UK front, investors are awaiting the speech from Bank of England (BOE) Governor Andrew Bailey, which is due on Tuesday. BOE policymaker is expected to provide cues for the likely monetary policy action ahead.