Key events today:

6:00 PM UTC: USD – Release of the Federal Reserve meeting minutes.

On Tuesday, the GBP/USD pair ended a tough two-day losing streak, finding a technical rebound from the 200-day exponential moving average (EMA) just north of the 1.2700 mark. Price action remains in “no man’s land” ahead of the scheduled US tariff implementation, with investors quiet as they await key inflation and sentiment data from the US due later this week.

Overall, it’s a quiet week for UK economic data, and Tuesday offered a welcome break from the usual stream of geopolitical and trade headlines that have become the norm under the Trump administration in recent weeks. Still, several key Federal Reserve officials took the opportunity to speak, warning that uncertainty and the unwanted inflationary consequences of US tariffs will complicate, not ease, the Fed’s path to cutting rates.

However, traders continue to bet that the Fed will be forced to cut rates before the end of the year, as the negative economic fallout from the tariffs could push the US into a recession. According to CME’s FedWatch Tool, rate swap traders are starting to hope for a first quarter-point rate cut as early as May. However, most rate market participants still see a 25 basis point cut in July as more likely, with cumulative cuts of 100 basis points or more by the end of the year.

On Thursday, US Consumer Price Index (CPI) data will be released, followed by Producer Price Index (PPI) and the University of Michigan (UoM) Consumer Sentiment Index on Friday. This will be the last round of key US inflation and sentiment data tied to the “pre-tariff” period of 2025 — and a crucial indicator for the rest of the calendar year.

Recommendation: BUY at 1.2860, SL 1.2780, TP 1.2960.