Footsie down five days in a row ahead of FOMC conclusion

Earlier in the day, the annual inflation in the UK surged to 5.1% in November from 4.2% the month before, coming in above consensus expectations of 4.8% and the Bank of England's forecast for 4.5%. It was the highest annual rate since September 2011. However, the Bank of England will probably leave rates unchanged at Thursday's meeting despite the rising inflation.

During the US session, retail sales for November disappointed notably, printing only 0.3% month-on-month, well below the 0.8% expected, and down from 1.8% in October. At the same time, the ex-autos gauge fell to 0.3% from 1.8%.

Simultaneously, the retail sales' Control Group' - the data that feeds into GDP - shrank 0.1% monthly, massively missing the +0.7% forecast. US equities declined after the data, dragging EU bourses lower with them.

Later today, the FOMC verdict on monetary policy will be announced. The Fed will likely quicken the tapering process, while the market currently prices in three rate hikes in 2023, with the Fed is expected to confirm that view. 

The FTSE index declined below the 50-day moving average (purple line), changing the short-term momentum to bearish. As long as it remains below it (7,230 GBP), bears could be in control.

The next target in this bearish wave is at the 200-day moving average (green line) at 7,060 GBP.

Alternatively, if the price climbs back above the 50-day average, we could see a rally toward the swing highs near the 7,350 GBP area.

Volatility is expected to be highly elevated after the FOMC decision, influencing all assets.