GBP/USD remains confined in a range above mid-1.3300s ahead of UK jobs report

GBP/USD struggles to gain any meaningful traction amid a mixed fundamental backdrop.
BoE rate cut bets undermine the GBP, while dovish Fed-led weaker USD supports the pair.
Traders also seem reluctant ahead of key macro releases and the central bank event risk.

Haresh Menghani FXStreet

The GBP/USD pair extends its sideways consolidative price move through the Asian session on Tuesday and currently trades around the 1.3370-1.3365 region, nearly unchanged for the day. Traders seem reluctant and opt to wait for this week's important macro releases and the key central bank event risk before placing fresh directional bets.

The UK monthly employment details will be published later today, ahead of the delayed US Nonfarm Payrolls (NFP) report for October. This will be followed by the latest UK inflation figures on Wednesday and the crucial Bank of England (BoE) policy decision on Thursday, which will play a key role in influencing the British Pound (GBP). Apart from this, the US consumer inflation figures on Thursday could determine the near-term trajectory for the GBP/USD pair.

In the meantime, the growing acceptance that the Bank of England (BoE) will lower borrowing costs at its policy meeting later this week keeps the GBP bulls on the defensive. Apart from this, a slight deterioration in the global risk sentiment contributes to the Pound's relative underperformance against the perceived safer US Dollar (USD). The upside for the Greenback, however, remains capped in the wake of rising bets for two more rate cuts by the Federal Reserve (Fed).

Adding to this, expectations that the new Trump-aligned Fed chair will be an uber-dovish and slash interest rates regardless of the economic fundamentals keep the USD on the defensive near a two-month low. This, in turn, is seen acting as a tailwind for the GBP/USD pair, which, so far, has managed to defend a technically significant 200-day Simple Moving Average (SMA). The said support is pegged near the 1.3350 area and could act as a pivotal point for intraday traders.

Economic Indicator

Claimant Count Change

The Claimant Count Change released by the UK Office for National Statistics presents the change in the number of unemployed people in the UK claiming benefits. There is a tendency for the metric to influence GBP volatility. Usually, a rise in the indicator has negative implications for consumer spending and economic growth. Generally, a high reading is seen as bearish for the Pound Sterling (GBP), while a low reading is seen as bullish.

Why it matters to traders?

The change in the number of those claiming jobless benefits is an early gauge of the UK’s labor market. The figures are released for the previous month, contrary to the Unemployment Rate, which is for the prior one. This release is scheduled around the middle of the month. An increase in applications is a sign of a worsening economic situation and implies looser monetary policy, while a decrease indicates improving conditions. A higher-than-expected outcome tends to be GBP-bearish.

Author

Haresh Menghani

FXStreet

Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.

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