Sterling rose past $1.25, approaching a 12-month high of $1.2679 reached on May 10th, as the Bank of England remains committed to tightening monetary policy in order to combat high inflation.

The Bank of England is expected to raise interest rates to 4.75% on June 22 and reach a peak of 5.5% by year-end.

The latest CPI report showed UK annual inflation rate decreased to 8.7% in April from 10.1% in March, marking the first time it fell below double digits since last summer.

Elsewhere, the outcome of the next Federal Reserve monetary policy meeting this week is highly uncertain, as inflation data is due to be released a day earlier, while the ECB is expected to raise rates by 25 bps when it meets on Thursday.