GBP/USD steady after UK labor market data, US CPI eyes

• GBP/USD remains under pressure near 1.3050 as cautious market sentiment overshadows brief recovery triggered by UK employment data.
• US CPI data will be the highlight on Wednesday.
• Markets will also watch the US presidential debate on Tuesday.

GBP/USD remains on the defensive, sliding towards 1.3050 during the US session. Despite a temporary boost from positive UK employment data earlier in the day, the pair is struggling to hold ground amid a cautious market atmosphere.

On Tuesday, Britain’s Office for National Statistics (ONS) revealed that the IOM unemployment rate fell slightly to 4.1% for the three months to July, down from 4.2%, in line with market expectations. Employment figures showed a significant improvement, with an increase of 265,000 jobs in the same period, compared to the previous increase of 97,000. Meanwhile, annual wage growth, as indicated by average earnings without bonus, fell to 5.1% from 5.4%.

Upcoming US inflation data will be in focus this week, with the consumer price index (CPI) for August due out on Wednesday. Headline inflation is expected to ease to 2.6% a year, down from 2.9% in July, while core inflation is expected to hold steady at 3.2% a year. On Thursday, producer price index (PPI) data will show a drop in headline inflation to 1.7% year-on-year, compared to 2.2% in July. Meanwhile, expectations for Federal Reserve easing have stabilized, with the likelihood of a 50 basis point rate cut this month falling to 20-25%. The market continues to anticipate 100-125 basis points of easing by the end of the year with no Fed speakers scheduled until Chairman Powell’s September 18 press conference.

GBP/USD Technical Outlook

GBP/USD has dipped below its 20-day simple moving average, which paints the outlook with ease, at least in the short term. However, as the pair holds 100- and 200-day SMAs, the overall outlook remains positive.

Meanwhile, indicators including the Relative Strength Index (RSI) and Moving Average Convergence Divergence (MACD) have flattened into negative territory, suggesting that the current bearish pressure is not a threat.

GBP/USD Daily Chart