[MARKET ANALYSIS] DXY is lacklustre into the FOMC; GBP mildly pressured following UK CPI

G10s are mixed against a flat USD this morning, with price action tentative heading into a key FOMC policy decision later today. EUR and JPY hold marginally afloat, whilst the Loonie slightly lags vs peers. DXY currently holds towards the lower end of a 99.54-99.73 range. Action has been lacklustre throughout the overnight session and for much of the European morning, with traders ultimately awaiting Retail Sales and the Fed policy decision later today. The former will likely spark little reaction given the close proximity to the Fed. On that note, expectations are for a 25bps hike; attention will be on if it is accompanied with hawkish rhetoric/guidance. This could either be provided through a hawkish set of SEPs, a unanimous hike or overt hawkish language at Warsh’s presser. At least one of these would likely be required to give bond traders enough confidence in market stability, to allow yields to edge off highs. Note: A full Fed preview can be found on the Newsquawk Research Suite. GBP had regional inflation metrics to digest this morning. Whilst headline rose from the prior (in-line), Core Y/Y and Services was unchanged from the previous month. Therefore, the data is unlikely to shift views at the MPC into Thursday’s confab, where rates are expected to be held steady in a 6-3 vote split. Following the data, Cable saw some two-way action, before eventually moving lower as traders curtailed their rate hike bets.