Important events today:

06:00 UTC: USD – GDP Change.

12:30 UTC: USD – Consumer Price Index.

18:00 UTC: USD – FOMC Decision on Main Interest Rate.

The GBP/USD pair is trading with slight losses around 1.2740 in early Asian session on Wednesday. The prolonged rise of the US dollar (USD) amid cautious sentiment is putting pressure on the main pair. Investors will closely watch the US Consumer Price Index (CPI) data, which will be released a few hours before the FOMC meeting.

A stronger-than-expected US employment report last week dampened expectations that the Federal Reserve (Fed) will start cutting interest rates in September. However, a softer-than-expected inflation report may influence Fed Chair Jerome Powell, who may maintain his stance on three rate cuts by the end of the year. This, in turn, could pressure the US dollar. The US Consumer Price Index in May is expected to increase by 3.4% year-over-year, while the core Consumer Price Index for the same period is expected to rise by 3.5% year-over-year.

The Fed is expected to keep rates unchanged at the June meeting on Wednesday. Traders will focus on the latest interest rate forecasts regarding how many times the Fed will cut rates in 2024. According to CME FedWatch Tool data, markets expect one to two rate cuts in 2024.

On the other hand, the UK labor market has been contracting for the fourth consecutive time. Employment change for the three months to April decreased by 140,000 compared to the previous figure of 177,000. Meanwhile, the ILO unemployment rate rose to 4.4% for the three months to April from the previous 4.3%, worse than the market’s expectation of 4.3%. The number of people claiming unemployment benefits increased by 50,400 in May compared to 8,400 in April. The British pound (GBP) declined after the release of weak reports, as the unemployment rate and claimant count data for May showed a worrying picture of the UK’s labor market.

Recommendations: Mainly trade with Sell orders from the current price level.