- GBP/USD remains under pressure around the 1.3050 region as cautious market sentiment masks a near-term recovery sparked by the UK employment data.
- US CPI data will be a focus on Wednesday.
- Markets will also be focused on the US presidential debate on Tuesday.
The GBP/USD pair remains on the defensive, dropping towards 1.3050 during the American session. Despite a brief rally following positive UK employment data earlier in the day, the pair is struggling to hold up amid a cautious market environment.
The UK Office for National Statistics (ONS) said on Tuesday that the ILO unemployment rate fell slightly to 4.1% from 4.2% for the three months to July, in line with market expectations. Employment data showed a strong improvement, with the number of employed people increasing by 265,000 over the period, up from a previous increase of 97,000. Meanwhile, annual wage growth, measured as average wages excluding bonuses, slowed to 5.1% from 5.4%.
This week, upcoming U.S. inflation data will be closely watched, with the August Consumer Price Index (CPI) due to be released on Wednesday. Headline inflation is expected to fall to 2.6% y/y from 2.9% in July, while core inflation is expected to remain stable at 3.2% y/y. Producer Price Index (PPI) data due on Thursday is expected to show headline inflation falling to 1.7% y/y from 2.2% in July. Meanwhile, Federal Reserve (Fed) easing expectations are stable, with the likelihood of a 50 basis point rate cut this month dropping to 20-25%. The market continues to expect 100-125 basis points of easing by the end of the year, with no Fed speakers scheduled until Chairman Powell's press conference on September 18th.
GBP/USD Technical Outlook
GBP/USD is below its 20-day simple moving average, indicating a bearish outlook, at least in the short term. However, the overall outlook remains positive as the pair holds above its 100-day and 200-day simple moving averages.
Meanwhile, indicators such as the Relative Strength Index (RSI) and the Moving Average Convergence Divergence (MACD) are trading sideways in the negative territory, suggesting that the current bearish pressure is negligible.
