GBP/USD oscillates in a range below 1.2700 mark, traders keenly await UK jobs data

The GBP/USD pair fails to capitalize on the overnight modest bounce from the 100-day Simple Moving Average (SMA), near the 1.2615 area, or its lowest level since late June and oscillates in a narrow range during the Asian session on Tuesday. Spot prices currently trade around the 1.2685 region as traders keenly await the release of the latest UK monthly employment details before placing fresh directional bets.

The market focus, meanwhile, will remain glued to the UK wage growth data, which is expected to accelerate to the fastest pace on record in July. A stronger print will likely increase the odds for a November interest rate hike by the Bank of England (BoE) and provide a goodish lift to the British Pound. Conversely, an undershoot would have the opposite impact on the back of looming recession risks. Nevertheless, the data will determine how many further rate hikes the BoE has left in the tank and provide a fresh directional impetus to the GBP/USD pair.

In the meantime, the underlying bullish sentiment surrounding the US Dollar (USD) is holding back traders from placing bullish bets around the major. In fact, the USD Index (DXY), which tracks the Greenback against a basket of currencies, stands tall near a two-month peak touched on Monday and remains well supported by growing acceptance that the Federal Reserve (Fed) will keep interest rates higher for longer. The bets were lifted by the US data, which suggested that the battle to bring inflation back to the Fed's 2% target is far from being won.

Meanwhile, expectations that the Fed will stick to its hawkish stance remain supportive of elevated US Treasury bond yields and continue to underpin the buck. Apart from this, the worsening economic conditions in China and geopolitical tensions also seem to benefit the Greenback's status as the global reserve currency. This might further contribute to capping the upside for the GBP/USD pair, warranting some caution for bullish traders and before confirming that the recent downfall witnessed over the past four weeks or so has run its course.

Technical levels to watch