The cost of living in the UK as represented by the Consumer Price Index (CPI) for August month is due early on Wednesday at 06:00 GMT. The key inflation data will pave the way for market forecasts concerning the “Super Thursday” and hence become even more important than the otherwise case.

The headline CPI inflation is expected to recede from 1.0% prior to 0.0% on an annual basis. The Core CPI that excludes volatile food and energy items can also follow the suit with market forecasts suggesting 0.6% YoY print versus 1.8% previous readouts. Talking about the monthly figures, the CPI could drop to -0.6% from +0.4%.

On the other hand, Four senior congressmen wrote to Boris Johnson to reiterate there will be no US-UK trade deal if the legislation to override the EU-UK Withdrawal Agreement isn’t pulled. The tweet is a follow up of earlier informal warnings from Rep. Nancy Pelosi, Speaker of the United States House of Representatives last week.

Pelosi warned that Britain will be unable to secure a trade deal with the US if it does anything to undermine the treaty that brought peace to Northern Ireland after decades of violence. The UK concedes the legislation would “break international law in a very specific and limited way,  but it has not gone down too well among top Democrats in the US.

The FOMC is likely to reiterate the status quo of loose monetary policy and accommodative financial conditions, but US Dollar currency volatility could accelerate if guidance changes materially. In addition to the headline interest rate decision and SEPs, market participants might emphasize commentary on average inflation targeting (AIT) and yield curve control (YCC), which may weigh notably on the US Dollar as well.

The pair has mainly cheered the US dollar weakness as the DXY fails. Also favoring the GBP/USD buyers are speculations,  UK Express, and Telegraph, concerning the British push to break the Brexit deadlock while easing stance on fisheries. It should also be noted that recently neutral statements from the Bank of England (BOE) policymakers also keep the Cable buyers hopeful ahead of tomorrow’s key monetary policy meeting and Quarterly Inflation Report (QIR).

GBP/USD 4 Hour Chart:

Support: 1.2827 (S1), 1.2765 (S2), 1.2715 (S3).

Resistance: 1.2938 (R1), 1.2988 (R2), 1.3049 (R3).

As a result, today’s inflation data becomes the key and hence any surprise positive outcome can strengthen the pair while the actual readings near the expected downbeat figures may print short-term declines of the quote. As of now, we expect a bullish trend for GBP/USD.