Sterling remained close to its two-month top against the Dollar on Tuesday, but is on track to end a seven day streak of gains against the Euro ahead of major economic data.

Consumer price inflation data is due to be published on Wednesday, whilst ‘flash’ PMI data on UK business activity will be released on Thursday.

Analysts noted that favourable risk sentiment and a somewhat more dovish adjustment in expectations for the European Central Bank's monetary policy have bolstered the Pound over the past week and a half, citing its correlation with the US stock index S&P.

Sterling is viewed by market participants as riskier than the safe-haven greenback and the Euro, Reuters news agency reports.

The Pound fell 0.05% at 85.44 Euro per Pound at the time of writing, after gaining for seven sessions from around 86 pence on 10th May.

“Since the last Monetary Policy Committee (MPC) meeting, it has been well understood that the June rate cut scenario depends on this week's CPI and the next one due June 19,” stated Paul Mackel, global head of forex research at HSBC.

“We maintain GBP-USD is expensive versus what interest differentials imply,” he went on to say, noting that Huw Pill, the Chief Economist of the Bank of England (BoE), who has expressed more caution regarding disinflation, is scheduled to speak on 24th May.

Earlier this month, governor of the BoE, Andrew Bailey suggested that potential future rate cuts might need to exceed market expectations. However, the following day, Pill cautioned against placing too much emphasis on the possibility of a rate cut at the June rate meeting.

Furthermore, Sterling increased 0.1% to $1.2715 at the time of writing, after reaching $1.2725 on Monday, the highest since 21st March.

The Pound increased by approximately 2% this month, attributed to a decline in the US Dollar resulting from disappointing growth and inflation figures, coupled with stronger-than-expected UK data.