Key events today:

12:30 UTC: USD – Consumer Price Index.

The GBPUSD pair is consolidating around 1.2590 during the early Asian session on Wednesday. The major pair remains above the key 100-day Exponential Moving Average (EMA) but is still below the 1.2600 barrier. The Consumer Price Index and the US retail sales report for April will be in focus. Federal Reserve officials Kashkari and Bowman are also scheduled to speak.

Wholesale inflation, measured by the Producer Price Index (PPI), reached its highest level in a year, the Bureau of Labor Statistics reported on Tuesday. The US PPI for April increased by 2.2% year-on-year compared to 1.8% recorded in March (revised from 2.1%), and matched forecasts. The core PPI, excluding food and energy costs, for the same period rose by 2.4% compared to the previous figure of 2.1% and also met expectations. On a monthly basis, both the PPI and the core PPI in April increased by 0.5% compared to the previous month.

The US Federal Reserve stated on Tuesday that the April producer price index provides more reason to keep rates at a more prolonged level, but it does not mean that the Fed will need to raise rates again. Meanwhile, Cleveland Fed President Loretta Mester said she still would like the central bank to begin tapering asset purchases this year, adding that the Fed is in a “very good place” to study the economy before plotting a course to raise rates.

Recommendations: Monitor the 1.2600 level, consider selling positions on a rebound. If it consolidates above, consider buying.