• If CPI unfolds above or meets the preliminary estimate then it will create hope for one more rate hike from BoE.
• The market prices with a 72.2% probability that the Fed will hike the fed fund rates by 50 basis points in May.
• President Volodymyr Zelenskiy said Talks between Ukraine and Russia are confrontational but moving forward, West plans more sanctions.

Pound traded higher against the US dollar during Tuesday trading session. The sterling has been underpinned by strength in risk appetite as global equities move higher, resulting in a weaker USD and this move comes ahead of the CPI data which is due later today.

 A preliminary estimate for the yearly UK’s CPI is 5.9% that is far high then the previous record of 5.5%. If the CPI comes as per expectation then it will create hope for one more rate hike by the Bank of England (BOE). Meanwhile. BOE has increased its interest rates by 25 basis points (bps) three times in a row. Also, the BOE was the first central bank, which elevated its interest rates after the widespread of Covid-19.

On the other hand, the market already digested the 7 rate hike announcement from the Fed. St. Louis Fed President James Bullard called for the central bank to raise its benchmark overnight interest rate to 3% this year and move aggressively to keep inflation under control. The market is pricing in a 72.2% probability that the Fed will hike the fed fund rates by 50 basis points in May. Odds for a bigger hike jumped from just over 50% on Monday.

Talking about the Ukraine crisis, Talks between Ukraine and Russia are confrontational but moving forward, President Volodymyr Zelenskiy said on Wednesday, as the West plans to announce more sanctions against the Kremlin amid a worsening humanitarian crisis.

Intense Russian air strikes are turning besieged Mariupol into the “ashes of a dead land”, the city council said on Tuesday, as street fighting and bombardments raged in the port city.

In an early morning address, Zelenskiy held out hope for negotiations, which have yielded little since the Feb. 24 invasion began. “It’s very difficult, sometimes confrontational,” he said. “But step by step we are moving forward.”

Mariupol has become the focus of the war that erupted when Putin sent his troops over the border on what he calls a “special military operation” to demilitarise Ukraine and replace its pro-Western leadership. If the war situation escalates then it would weigh on the risk perceived pound

GBP/USD 4 Hour Chart:

Support: 1.3164 (S1), 1.3065 (S2), 1.3011 (S3).

Resistance: 1.3317 (R1), 1.3371 (R2), 1.3470 (R3).

Apart from the UK CPI data and Fed Powell speech will be the key catalysts in directing the pair, However market will also keep an eye on the Ukraine headlines. In the meantime, we expect a bullish trend for GBP/USD.