GBP/USD trades with modest gains above 1.2500 mark ahead of UK jobs data, US CPI

GBP/USD regains some positive traction on Tuesday and draws support from fresh USD selling.
The uncertainty over the Fed’s rate hike path and a positive risk tone undermines the Greenback.
Traders now look to the UK jobs data and the crucial US CPI report for some meaningful impetus.

Haresh Menghani FXStreet

The GBP/USD pair attracts some buying during the Asian session on Tuesday and reverses a part of the previous day's sharp retracement slide from the 1.2600 mark, or a one-month peak. Spot prices currently trade just above the 1.2500 psychological mark as market participants now look forward to the UK monthly employment details and the latest US consumer inflation figures for a fresh impetus.

In the meantime, expectations that the Federal Reserve (Fed) will more likely skip a rate hike this month continue to weigh on the US Dollar (USD) and lends some support to the GBP/USD pair. It is worth recalling that a slew of FOMC members recently reaffirmed market expectations for an imminent pause in the US central bank's year-long policy tightening cycle. In contrast, the Bank of England (BoE) is expected to be far more aggressive in policy tightening to contain stubbornly high inflation. Moreover, market participants see a greater chance that rates in the UK will peak at 5.5% later this year.

The downside for the USD, however, seems cushioned in the wake of rising bets for another 25 bps lift-off at the July FOMC meeting. Surprise rate hikes by other major central banks last week - the Reserve Bank of Australia (RBA) and the Bank of Canada (BoC) - suggested that the fight against inflation is not over yet and support prospects for additional rate hikes by the Fed. Hence, the market focus will remain on the crucial US CPI report, due later during the North American session. The data will influence the USD ahead of the June FOMC policy decision, scheduled to be announced on Wednesday.

Investors on Tuesday will further take cues from the UK jobs data, which is expected to show that the number of people claiming unemployment-related benefits fell by 9.6K in May. Furthermore, the ILO Unemployment Rate is seen ticking higher to 4% during the three months to April, while Average Hourly Earnings likely accelerated during the reported period, pointing to growing signs of persistence in underlying price pressures. This might be enough to provide a fresh lift to the British Pound and assist the GBP/USD pair to capitalize on its modest intraday gains ahead of the key data/event risks.

Technical levels to watch

GBP/USD

Overview
Today last price	1.252
Today Daily Change	0.0015
Today Daily Change %	0.12
Today daily open	1.2505

Trends
Daily SMA20	1.2442
Daily SMA50	1.2471
Daily SMA100	1.231
Daily SMA200	1.2021

Levels
Previous Daily High	1.2599
Previous Daily Low	1.2487
Previous Weekly High	1.259
Previous Weekly Low	1.2369
Previous Monthly High	1.268
Previous Monthly Low	1.2308
Daily Fibonacci 38.2%	1.253
Daily Fibonacci 61.8%	1.2557
Daily Pivot Point S1	1.2462
Daily Pivot Point S2	1.2418
Daily Pivot Point S3	1.2349
Daily Pivot Point R1	1.2574
Daily Pivot Point R2	1.2643
Daily Pivot Point R3	1.2686

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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