Today's focus will be on GBP/USD and UK interest rates. Cable has taken a beating as of late as the Greenback has rallied on the idea that a strengthening US economy will prevent the Fed from cutting rates. Where to now?

Well, later today we have inflation and trade balance data out of the UK, and the outcome could have a significant affect on Cable.

If we see weaker than expected CPI data, this will further take away any reasoning that the Bank of England will need to continue to fight inflation with further hikes. Of course, if we continue to see inflation strengthen then we can bet that a short-term rally will occur.

The Trade Balance report will be a strong indicator of the health of the economy, so look out for both reports at 4:30 am EDT. Here's our trade idea to prepare for positive or negative UK data:

Long GBP/USD at 1.9750, stop at 1.9710, pt1 at 1.9780, pt2 at 1.9800

Please remember to never risk more than 1% of your account on any single trade. Adjust your position sizes accordingly.

Good luck and good trading!