Important events today:

14:00 UTC: USD – Consumer Price Index.

On Tuesday, the GBP/USD pair fluctuated near recent highs as markets reassessed the chances of a Federal Reserve rate cut. The decline in US retail sales ended the recent streak of American data, indicating that price pressure had finally eased enough for the Fed to potentially start a rate-cutting cycle in September. US retail sales in June fell to 0.0%, matching forecasts and down from the revised previous month’s figure of 0.3%. The decline in US retail sales was the final straw for rate-cut-hungry markets, which bet on a rate cut when the Federal Open Market Committee (FOMC) meets on September 18.

The slowdown in retail sales growth added to last week’s CPI data, which revived broad market hopes for a September rate cut. According to CME’s FedWatch tool, rate markets currently assess nearly a 100% chance of a rate cut in September by at least a quarter point, with up to three rate cuts possible in 2024.

Traders dealing in pounds are approaching a series of key UK data releases in the second half of the trading week. Wednesday will start with the release of fresh UK CPI inflation data. It is expected that UK CPI inflation for June will decrease to 0.1% m/m from the previous value of 0.3%, and annual CPI inflation will remain at 2.0% y/y.

On Thursday, the UK data parade will continue with updated employment figures. The change in UK jobless claims in June is expected to decrease to 23.4K from the previous value of 50.4K. On Friday, UK retail sales data for June will be released, which is forecasted to decline by -0.4% compared to the previous value of 2.9%.

Recommendations: Monitor the 1.3000 level; if sustained above, take Buy positions, if it bounces back, take Sell positions.