GBP/USD: Bounce still remains capped by 1.2970 ahead of UK jobs

The GBP/USD pair continues to trade in a 30-pips narrow range heading into early European trading, struggling to take on the recovery above the 1.2970 level amid the renewed US-China trade optimism and cross-party Brexit talks stalemate.

The spot managed to find support once again at the two-week lows of 1.2943 in early Asia after the risk currencies got a fresh lift from positive comments by the US President Trump on the US-China trade talks. Trump said that he feels the Chinese trade negotiations will be successful.  

However, the bounce remains limited by ongoing uncertainty around the Brexit issue, with the cross-party Brexit talks going nowhere and denting the sentiment around the GBP.  According to the latest report by the Sky News, “Theresa May and her bitterly divided Cabinet are meeting to decide whether to axe cross-party Brexit talks with Labour that have failed to achieve a breakthrough in six weeks.”

Meanwhile, markets also refrain from buying the latest uptick, as they remain wary ahead of the UK labor market report due later today at 0830 GMT. “For the three months to March, the ILO unemployment rate is expected to remain steady at 3.9%, while average earnings for the same period are seen ticking modestly lower from the previous month, but holding firmly above 3.0%, “FXStreet’s Chief Analyst Valeria Bednarik notes.

On Tuesday, the Cable drowned to two-week lows sub-1.2950 levels after risk aversion intensified on the Chinese retaliation while the Brexit deadlock also accentuated the pain in the pound. China announced its own broadside of tariffs on $60 billion worth of US imports in retaliation to the Trump administration raising tariffs on $200 billion of Chinese imports.

Looking ahead, the UK jobs data may have limited impact on the spot, as the overall market sentiment will continue to remain the main driver amid trade risks and Brexit jitters.

GBP/USD Technical Levels