The FOMC is expected to keep the US Funds rate at 5.25% at 19:15GMT, with the content of its accompanying statement of prime interest. Today's key pre-FOMC US event risk is the 13:30GMT unveiling of the size of October's trade deficit.
Forecast: $63.7bn, from $64.3bn in September. GBP/USD rallied to intra-week highs just shy of touted offers at 1.9650 after the 09:30GMT disclosure of November's higher-than-expected UK CPI. The above-forecast CPI is good news for UK rate hawks touting another 25bp hike to 5.25% in February. Some stops are tipped above 1.9650. 1.9595 (yesterday's high) is now a pullback support point. 1.9570 is a lower prop.
Cable rallied through 1.9570 to a high of 1.9595 on the back of yesterday's Greenspan comment that he expects the USD to continue to drift downwards until there is a change in the US balance of payments (Reuters). UK unemployment and earnings data will be revealed at 09:30GMT tomorrow. Thursday will see the release of UK November retail sales figures, and the CBI's December industrial trends survey.
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