Forex Today: Pound Sterling benefits from inflation data, focus shifts to FOMC Minutes

Here is what you need to know on Wednesday, May 22:

Pound Sterling gathers strength against its major rivals early Wednesday, boosted by the stronger-than-forecast UK inflation readings for April. Existing Home Sales data for April will be featured in the US economic docket. Later in the American session, the Federal Reserve (Fed) will release the minutes of the April 30-May 1 monetary policy meeting.

The UK's Office for National Statistics reported on Wednesday that inflation in the UK, as measured by the change in the Consumer Price Index (CPI), declined to 2.3% on a yearly basis in April from 3.2% in March. This reading, however, came in above the market expectation of 2.1%. The core CPI, which excludes volatile food and energy prices, rose 3.9% in the same period, surpassing analysts' estimate of 3.6%. GBP/USD gained traction following the UK inflation report and was last seen trading at its highest level in two months near 1.2750. Reflecting the positive impact of CPI figures on Pound Sterling, EUR/GBP trades deep in negative territory at around 0.8500.

UK CPI inflation declines to 2.3% in April, closing in on BoE's target.

In the early trading hours of the Asian session, the Reserve Bank of New Zealand (RBNZ) announced that it left the policy rate unchanged at 5.5% as expected. In the policy statement, the RBNZ reiterated that the policy needs to be restricted and Governor Adrian Orr noted that they had a "real consideration" on raising rates at the meeting. NZD/USD edged higher following the RBNZ event and was last seen rising nearly 0.5% on the day at 0.6120.

Orr Speech: RBNZ Governor speaks on interest rate outlook after the hawkish hold.

The data from Japan showed that Exports and Imports both grew at an annual rate of 8.3% in April. After closing the day virtually unchanged on Tuesday, USD/JPY extends its sideways grind at around 156.50 early Wednesday. 

Japanese Yen depreciates due to increased trade deficit, steady US Dollar.

EUR/USD registered small losses on Tuesday and entered a consolidation phase during the Asian trading hours on Wednesday. The pair stays relatively quiet slightly above 1.0850 in the European morning.

Gold closed marginally lower on Tuesday and continued to edge lower early Wednesday. XAU/USD was last seen trading below $2,420.

Gold price loses its recovery momentum ahead of FOMC Minutes.