GBP/USD under some pressure ahead of Super Thursday

GBP/USD is trading at 1.4114 at the time of writing and off by some 0.27% having fallen from a high of 1.4189 to a low of 1.411 so far on Wednesday.

Sterling was a little higher in early London trading, initially shrugging off post-Brexit trade issues over Northern Ireland.

However, we have seen the US dollar creep a touch higher since traders looked to upcoming US inflation data and a European Central Bank (ECB) meeting on Thursday.

With the US inflation report in focus, investors ate growing nervous about whether the interest rate rises could end a 15-month dollar downtrend.

Meanwhile, Britain's Brexit minister, David Frost, is meeting European Commission Vice President Maros Sefcovic in London to try to resolve the differences over trading arrangements in Northern Ireland.

This is putting a dampener on the outlook for the pound because Brussels is accusing London of failing to implement checks on some goods moving from Britain to its province of Northern Ireland.

This is, therefore, breaking their agreement and has kicked off legal action over the British government's unilateral extension of a grace period.

The row has been dubbed the "sausage war" by British media because it affects the movement of chilled meats from Britain to Northern Ireland.

Meanwhile, US President Joe Biden is on his way to participate in the G7 summit and has decided to have a meeting with British Prime Minister Boris Johnson on Thursday. 

Biden has warned Britain that their trading relationship is at risk if Britain does not toe the line with the Ireland agreement. 

"If the relationship between the EU and the UK over this does worsen, it could be a significant headwind for sterling... but I think the market would rather ignore it," said Jane Foley, senior FX strategist at Rabobank.

Foley said that market participants were likely to continue to "gloss over" the Northern Ireland trade situation unless the Us president goes to town on Johnson on the issue.

Overall, currency markets have been treading water ahead of CPI and the ECB meeting, both on Super Thursday, which are expected to be market-moving.

It has been the worst volatility in over a year in forex according to the DBCVIX USD Volatility Index: