Key events today:

06:00 UTC: GBP – Consumer Price Index.

18:00 UTC: USD – FOMC decision on the main interest rate.

On Wednesday, the GBP/USD pair fell to 1.3150 as investors braced for the widely expected Federal Reserve rate cut on Wednesday, with the U.S. central bank expected to begin a rate-cutting cycle.

UK CPI inflation data is set to be released early Wednesday, but preliminary inflation figures are unlikely to provide a significant boost as the market has already priced in most of the expected outcome. The final UK CPI inflation data for August is expected to be 0.3% m/m compared to the previous decline of -0.2%, with the annual CPI expected to rise to 3.5% y/y, above the previous 3.3%.

U.S. retail sales data for August helped keep Fed expectations intact, rising by 0.1% compared to the median forecast of a -0.2% decline. July retail sales were also revised up to 1.1%, although core retail sales (excluding auto purchases) increased only by 0.1%, falling short of the 0.2% forecast.

The only significant event on this week’s data calendar remains the upcoming Fed rate decision on Wednesday. Markets have anticipated a rate cut by the Federal Reserve since the start of the year when investors called for a rate cut in March. According to CME’s FedWatch tool, rate markets are still divided on the extent of the first expected Fed rate cut since early 2020. Traders are pricing in a 60% chance of a double cut of 50 basis points to kick off the next Fed rate-cutting cycle, with the remaining 40% expecting a more moderate 25 basis point cut.

Recommendations: Watch the 1.3150 level. If the pair consolidates above this level, consider taking Buy positions. If it bounces off, take Sell positions.