May 28 Reuters The pound held close to multimonth highs versus the euro and hit a fresh twomonth high against the dollar as expectations for Bank of England BoE rate cuts and growing investor risk appetite supported the British currency.

Investors are awaiting key inflation data from major economies this week that could offer clues on the global interest rate outlook.

German inflation figures will be released on Wednesday and the wider euro zone39;s reading on Friday, along with the U.S. core personal consumption expenditures PCE price index the Federal Reserve39;s preferred measure of inflation.

Sterling was flat at 1.2768 after hitting 1.2783 earlier in the session, its highest level since March 21.

The euro rose 0.14 against the pound at 85.14 pence per euro, after hitting 84.94 on Monday, its lowest level since August 2023.

Strong services inflation in the April data and other key economic indicators on both sides of the Atlantic shifted expectations for the BoE39;s first rate cut firmly until after August, strengthening the view that monetary policy will not be a headwind while appetite for risky assets can still boost sterling, analysts said.

They also mentioned the pounds correlation with the U.S. stocks indexes. SP 500 future contracts inched higher on Tuesday, with Wall Street reopening after a long weekend.

Money markets fully price in 25 basis points of BOE monetary easing in November , a 60 chance of such a move in September and a 40 chance in August….