The dollar moved up on Wednesday ahead of the Federal Reserve minutes, whilst the sterling rose as data revealed that UK inflation declined less than forecasted in April.

Investors have been increasing their bets on rate cuts in the US following a less severe inflation reading last week, despite ongoing cautious remarks from Fed officials.

On Tuesday, Fed Governor Christopher Waller stated that he would require several additional months of positive inflation data before he would feel inclined to endorse rate cuts.

Ahead of the data due out next week, the Fed will release the minutes of the last policy meeting, which will be carefully analysed for any “dovish or hawkish undertones masked by the consistency of Fedspeak,” stated Andy Ji, senior Asia FX analyst at InTouch Capital Markets.

The markets have priced in around 40 basis points of easing, compared to 52 basis points last week.

At the time of writing the Dollar index was up 0.05% at 104.70, just over a five-week low of 104.07 hit last week, Reuters reports.

In the UK, the Pound edged higher as inflation moved closer to the Bank of England’s target in April, but didn’t decelerate as much as predicted.

British consumer prices increased by 2.3% in annual terms in April, marking a slowdown from the 3.2% rise observed in March. Both the Bank of England and economists surveyed by Reuters had anticipated an annual rate of 2.1%.

Money markets currently indicate a 13% chance of a rate cut in June, as per LSEG data. Earlier this week, pricing in derivatives markets indicated that traders forecast a 55% chance of an initial rate cut taking place next month.

Sterling increased 0.16% to $1.2730 after hitting a two-month high of $1.2761. Whereas the Euro declined against the Pound to two-month lows, and at the time of writing was down 0.23% at 85.21 pence.