Important events today:

07:00 UTC – GBP: Consumer Price Index m/m

15:00 UTC – GBP: Speech by Bank of England Governor Bailey

15:30 UTC – USD: EIA Crude Oil Inventories Change

GBP/USD is losing strength below the 1.2600 level in the early hours of Asian trading on Wednesday. On Wednesday, investors will be focused on the UK inflation data for January.

US inflation data, as measured by the Consumer Price Index (CPI), came in above expectations, with core CPI rising 0.4% month-over-month and core inflation rising 0.3% month-over-month. The report underscores the upside risks to US core inflation and reduces the likelihood of a rate cut next month. Atlanta Federal Reserve (Fed) President Raphael Bostic said a rate cut in the next few months is unlikely. Bostic added that he believes inflation will be close to 2% by the end of 2024.

UK wage growth slowed less than expected in the fourth quarter of 2023, indicating the need for the Bank of England (BoE) to wait before cutting interest rates. Data from the Office for National Statistics on Tuesday showed average earnings excluding bonuses rose 6.2% from a year earlier, down from an upwardly revised 6.7% in the three months to November but better than expectations of 6.0%. Wages and salaries, including bonuses, fell to 5.8% from 6.7% in the three months through November, above the market consensus of 5.6%.

Money markets estimated the probability of a first rate cut by the Bank of England at its June meeting at 60%, down from 75% before the labor market data was released.

Recommendations: If the price consolidates below 1.2575 Sell