GBP/USD has lost ground in the Wednesday session, erasing the gains seen on Tuesday. In North American trade, the pair is trading at 1.3132, down 0.39% on the day. On the release front, British CPI dropped to 2.4%, shy of the estimate of 2.6%. In the U.S, construction indicators missed the forecasts. Building Permits ticked up to 1.24 million, shy of the estimate of 1.27 million. Housing Starts slipped to 1.20 million, missing the forecast of 1.22 million. Later in the day, the Federal Reserve releases the minutes of its September policy meeting. On Thursday, the UK releases retail sales, with the markets bracing for a decline of 0.4%. The U.S publishes Philly Fed Manufacturing Index and unemployment claims.

Prime Minister May is meeting with other EU leaders at a summit in Brussels, but any breakthroughs on Brexit is very unlikely. Donald Tusk, head of the European Commission, has called on British Prime Minister May to offer new proposals on the thorny issue of the Irish border. The EU is insisting that it will not sign a withdrawal agreement with Britain, unless there is a backstop which allows Northern Ireland to remain in a customs union with the EU after Brexit. However, the British government is unlikely to agree to such a move, since it would require regulatory barriers within the United Kingdom. With plans for a Brexit statement at Wednesday’s meeting on hold, the gulf between Britain and the EU remains wide, as the clock ticks down towards March, when the UK is set to leave the EU. On Tuesday, On Tuesday, Michel Barnier, chief Brexit negotiator for the EU, offered to extend the transition phase by 12 months, which would leave it in place until December 2021. This would give the sides more time to work on the proposed customs union as well as the thorny issue of the Irish border.

In the U.S, retail sales posted a weak gain of 0.1% in September, compared to August. However, on an annualized basis, the picture remains bright, with retail sales gaining a strong 4.7 percent. The third quarter ended with strong consumer spending, buoyed by record low unemployment and the Trump administration’s massive tax cuts. However, the stimulus from the tax reform package may have run out of steam, which could mean lower consumer spending numbers in the fourth quarter.