Key events today:

19:00 UTC: USD – FOMC Meeting Minutes Release.

On Tuesday, the GBP/USD pair tested a fresh multi-year high but then fell to a 29-month peak of 1.3270 as the British pound continues to gain momentum on the wave of US dollar sell-offs. Investors were captivated by hopes of a rate cut by the Federal Reserve (Fed) in September, with US inflation data on the Personal Consumption Expenditures (PCE) index only coming out on Friday, leaving the markets with little significant data to digest until then.

Fed Chair Jerome Powell all but confirmed that the central bank would move into a rate-cutting cycle on September 18 during his speech at the Jackson Hole Economic Symposium last Friday, sending market appetite soaring.

The UK economic calendar has little to offer, and Wednesday promises to be a quiet session on both sides of the Atlantic. At the start of the US session, traders will be watching Federal Reserve Governor Christopher Waller’s speech, while central bank observers will keep an eye on the Bank of England (BoE) Chief Economist Catherine Mann’s speech, which will take place after the London markets close.

Mixed US housing price data for June gave investors little to think about. The Federal Housing Finance Agency’s (FHFA) monthly house price index fell by -0.1% compared to May’s 0.0% reading. Markets expected the index to come in at 0.2%. Meanwhile, the S&P/Case-Shiller Home Price Index rose by 6.5% compared to the previous year, lower than the revised 6.9% figure but still above the expected 6.0%.

US Gross Domestic Product (GDP) data for Q2 will be released on Thursday, and it is expected to remain at an annualized rate of 2.8%. However, the key data for this week will be the Personal Consumption Expenditures (PCE) price index for July, which is expected to increase year-over-year to 2.7% from 2.6% and remain at 0.2% month-over-month. Market participants hoping for a rate cut will be looking for inflation data to come in below expectations, while data above the forecast could trigger a new wave of optimism among risk-seeking investors.

Recommendations: Watch the 1.3290 level; if it holds above, consider taking Buy positions; if it bounces back, consider taking Sell positions.