GBP/USD: Await UK Labor Market and US CPI Data for Direction
Overview
The GBP/USD currency pair currently trades around 1.2814, slightly down from its opening level on Tuesday. As the Asian trading session commenced, the pair remained above the critical 1.2800 support level.
Factors Influencing GBP/USD
Lower Rate Cut Expectations Weigh on GBP
Recent comments by Bank of England (BoE) policymaker Catherine Mann indicating that the UK has a long way to go before inflation pressures align with the central bank's target have dampened expectations for interest rate cuts. This has put downward pressure on the Pound Sterling (GBP).
Cautious Mood Supports USD
Ahead of key events in both the UK and US, a cautious sentiment is prevailing in the market. This cautiousness is likely to boost safe-haven assets such as the US Dollar (USD) until clarity emerges.
Key Events to Watch
UK Labor Market Data
- Employment Change
- Claimant Count Change
- ILO Unemployment Rate
- Average Earnings
US CPI Inflation Data
- Consumer Price Index (CPI)
- Core CPI
These events could generate volatility in the GBP/USD market and dictate its short-term direction.
Technical Analysis
Support Levels:
- 1.2800
- 1.2750
- 1.2700
Resistance Levels:
- 1.2850
- 1.2900
- 1.2950
Technical Indicators:
- Moving Averages: GBP/USD is trading below its 20-, 50-, 100-, and 200-day moving averages.
- Relative Strength Index (RSI): The RSI is below 50, indicating oversold conditions.
Market Sentiment
Market sentiment remains mixed, with some analysts anticipating a strengthening USD on safe-haven demand, while others believe a stronger-than-expected US CPI report could dampen hopes of Fed rate cuts and potentially support the GBP.
Table: Key Technical Levels
| Support | Resistance |
|---|---|
| 1.2800 | 1.2850 |
| 1.2750 | 1.2900 |
| 1.2700 | 1.2950 |
List of Key Events
- UK Labor Market Data (Tuesday)
- US CPI Inflation Data (Tuesday)
Sub-Headings:
- Lower Rate Cut Expectations Weigh on GBP
- Cautious Mood Supports USD
- Key Events to Watch
- Technical Analysis
- Market Sentiment