Pound at 4-week high ahead of BoE minutes, FOMC decision

The pound rallied to a four-week high ahead of Wednesday's key central bank rate events as inflation rate rebounded from negative zone as per Tuesday's data.

GBP/USD jumped to 1.5655 on Tuesday, its highest since 22 May, from the previous close of 1.5601. The pair held the multi-week high on Wednesday in Asian deals.

At 8:30 GMT, the Bank of England will release the minutes of its 4 June meeting where it left the rates and asset purchase target unchanged.

Another data to wait from the UK is the April labour market numbers. The ILO unemployment rate for the three months to April has been forecast to have held at 5.5% while the average earnings including bonus is seen to have risen to 2.1% from 1.9%.

The Federal Reserve policy decision will be at 18:00 GMT. Both the central banks are unlikely to make any changes this time but the latter could provide more clues about the US rate path.

"An update to economic projections with a new dot chart should provide not only greater guidance as to whether we'll see just one or two rate hikes this year and determine whether September is the favourite for the first one, but also give a better idea of when and where the end rate will be, currently expected to be above 3.00% by the end of 2017," said Angus Campbell, senior analyst at FXPro.

UK's consumer price inflation came in at 0.1% from a year earlier in May as per data on Tuesday, compared with the April rate of -0.1% and meeting market expectations. The core measure also increased to 0.9% from 0.8% though it was slightly below the consensus of 1.0%.

Market expectations of the next BoE move is of a hike in the Bank Rate from the current level of 0.5%, but of late, the timing forecast has been pushed ahead to the next year citing persisting downside risks to growth.

Last month, UK's policymakers revised down their growth estimates for the next three years. The 2015 growth forecast was lowered from 2.9% to 2.5% while projections for 2016 and 2017 were lowered by 30 basis points to 2.6% and 2.4% respectively.

The previous change in Bank Rate was a reduction of 0.5 percentage points to 0.5% on 5 March 2009 and the last change in the size of the asset purchase programme was an increase of £50bn to a total of £375bn made on 5 July 2012.