In the United Kingdom, the prevailing news coverage centered on political developments against a backdrop of unclear macro drivers. On Monday, the US and UK jointly conducted new airstrikes against Houthi targets in Yemen. Concurrently, a decision by lawmakers in the House of Lords to postpone the contentious proposal of relocating migrants to Rwanda resulted in a divisive split within the conservative party. Despite these political dynamics, the impact on the pound was limited. As the morning unfolded, a slight indication of risk-on sentiment emerged, influenced by China's announcement of new stimulus measures on the policy front. Against this backdrop, GBP/USD continued its upward trend.

The currency pair has maintained a steady position around the $1.27 level for six consecutive weeks, showing no immediate catalyst to break out of its remarkably narrow range between $1.2600 and $1.2820. Tomorrow's release of the UK purchasing manager index holds the potential to drive FX price action. Analysts anticipate a marginal increase in the composite index from 52.1 to 52.2 in January, marking the third consecutive positive reading, fueled by a robust services sector. Looking ahead, aside from Friday's GfK consumer confidence figure, investor focus will shift to events in the Eurozone and the United States, which are expected to dominate the narrative for the remainder of the week.