GBP/USD: Sellers maintain the hold amid political uncertainty, all eyes on UK jobs data

Fears of hard Brexit and latest disappointment from British economics compress the GBP/USD pair to 1.2680 while waiting for the UK employment data ahead of the London open on Tuesday.

With the Brexit hardliner Boris Johnson leading the race to become the next UK PM, odds are high that the EU’s won’t be having upper hands in negotiations with the ex-Foreign Minister that has already said to exit the bloc on October 31 with or without a deal. The regional leaders have already started showing resentment against any such outcome.

On the other hand, recent industrial production and GDP data from the UK have been downbeat and may push the Bank of England (BOE) policymakers to alter their recently upbeat tone.

While likely improvement in April month average earnings including bonus (3 Mo/Yr) and expected lift unemployment rate may gain higher attention inside the jobs report, claimant count change could also determine the strength of employment data.

Forecasts suggest average earnings including bonus (3 Mo/Yr) to increase from 3.2% to 3.4% while that of excluding bonus may remain unchanged at 3.3%. Further, the unemployment rate could increase to 3.9% from 3.8% and the previous claimant count change reading (April month) was 24.7K.

Elsewhere, the US producer price index (PPI) ex-food and energy data for May and political developments relating to the US-China trade deal should also be observed closely. The core PPI number is might soften to 2.3% from 2.4% on a yearly basis while likely being at 0.2% from 0.1% on MoM.

Technical Analysis

Failures to cross 21-day simple moving average (SMA) level around 1.2700 continues to direct the Cable towards May month bottom near 1.2560 with 1.2600 being an intermediate halt. In a case where prices rally past-1.2700, 1.2765/70 and April month low surrounding 1.2865 may gain buyers’ attention.