The cost of living in the UK as represented by the Consumer Price Index (CPI) for September month is due on Wednesday at 06:00 GMT. The key inflation data will pave the way for market forecasts despite the current Brexit drama and the US stimulus headlines that dim the charm of the crucial economic releases.

The headline CPI inflation is expected to recover from 0.2% prior to 0.5% on an annual basis. The Core CPI that excludes volatile food and energy items can also follow the suit with market forecasts suggesting 1.3% YoY print versus 0.9% previous readouts. Talking about the monthly figures, the CPI could reverse the previous -0.4% figures with a +0.5% level.

Since Boris Johnson pulled the plug on Brexit negotiations last Friday, we’ve seen the Pound receive plenty of support. In spite of the British PM’s decision to end talks, the Pound has avoided a meltdown. Leaving the door ajar for the EU was key for the Pound.

Downing Street was clear in its message that there remained a willingness to talk should the EU be “willing” to change its stance. Things have not advanced since Friday’s decision to end talks. This is in spite of negotiators continuing talks in the early part of this week.

In reality, the EU is also reportedly looking for the UK to soften its stance in spite of Johnson’s decision to walk away. Access to UK fisheries continues to be the hurdle, one that French President Macron has drawn a line under.

Should Britain and the EU part ways without a deal, many will see Macron as the reason behind such an outcome.

On the other hand, The White House and Democrats have moved closer to the agreement on a new corona virus relief package as President Donald Trump said he was willing to accept a large aid bill despite opposition from his own Republican Party. Want to do it even bigger than the Democrats,” Trump said in an interview with Fox News on Tuesday. Democrat and House Speaker Nancy Pelosi, when asked whether an agreement could be reached next week, told reporters: “I hope so. That’s the plan.”

GBP/USD 4 Hour Chart:

Support: 1.2911 (S1), 1.2877 (S2), 1.2843 (S3).

Resistance: 1.2980 (R1), 1.3014 (R2), 1.3048 (R3).

Pound gains strength from the CPI expectation despite Brexit delay, we expect a bullish trend for GBP/USD.