- GBP/USD has failed to shake off the bearish pressure despite upbeat data.
- Dollar's market valuation is likely to continue to drive the pair's action.
- Annual CPI inflation in US is forecast to rise to multi-decade highs above 8%.
GBP/USD has reversed its direction following Monday's meagre recovery attempt and has struggled to shake off the bearish pressure after the UK jobs report early Tuesday. The pair trades within a touching distance of 1.3000 and sellers could show interest in case this level turns into resistance.
The UK's Office for National Statistics (ONS) reported on Tuesday that the ILO Unemployment Rate edged lower to 3.8% in February from 3.9% in January. The ONS further said that the number of job vacancies from January to March 2022 climbed to a new record high of 1,288,000. Finally, annual wage inflation, as measured by the Average Hourly Earnings Including Bonus, arrived at 5.4% as expected.
Regardless of the upbeat data, markets remain risk-averse in the European session and make it difficult for the British pound to find demand. Amid reports suggesting that Russia is preparing to ramp up the military aggression in eastern Ukraine and the ongoing coronavirus-related lockdowns in China, the UK's FTSE 100 Index is down 0.7%.
Later in the session, March inflation data from the US will be looked upon for fresh impetus. The Consumer Price Index (CPI) is forecast to jump to 8.5% in March from 7.9% in February.
Investors are currently pricing in a 7.8% probability of a total of 75 basis points (bps) rate hikes in the next two meetings, according to the CME Group FedWatch Tool. In other words, the Fed is widely expected to opt for back-to-back 50 bps increases in the next two meetings. Nevertheless, a stronger-than-forecast CPI reading could help the greenback preserve its strength and weigh on GBP/USD.
GBP/USD Technical Analysis
GBP/USD fell below 1.3000 (psychological level) on Monday and last Friday but is yet to make a four-hour close below that level. In case that happens, 1.2980 (April 8 low) could act as interim support before sellers can target 1.2900 (psychologically level).
On the upside, the descending trend line coming from late March forms the first technical resistance at 1.3050 ahead of 1.3080 (50-period SMA) and 1.3100 (psychological level).
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