GBP/USD clings to gains near daily peak after mixed UK jobs data, focus remains on US CPI

• GBP/USD attracts some buyers for the second straight day and draws support from a softer USD.
• A fresh leg down in the US bond yields, along with a positive risk tone, undermines the Greenback.
• Spot prices react little to the UK jobs data as the focus remains glued to the crucial US CPI report.

The GBP/USD pair gains some positive traction for the second straight day on Tuesday, albeit struggles to capitalize on the move and remains below the overnight swing high. Spot prices move little following the release of the UK monthly jobs data and hold steady around the 1.2580-1.2585 region, up over 0.25% for the day.

The UK  Office for National Statistics (ONS) reported that the number of people claiming unemployment-related benefits rose to 16K in November as compared to the 20.3K anticipated. Adding to this, the previous month’s reading was also revised down to 8.9K from the 17.8K reported originally. This, however, was overshadowed by the fact that Average Earning decelerated more than expected during the three months to October. This comes amid rising bets that the Bank of England’s (BoE) rate-hiking cycle could be reversed in 2024 and turn out to be a key factor acting as a headwind for the British Pound (GBP).

The US Dollar (USD), on the other hand, ticks lower in the wake of a fresh leg down in the US Treasury bond yields and bets that the Federal Reserve (Fed) will not hike interest rates again. Apart from this, a generally positive tone around the equity markets is seen undermining the Greenback’s relative safe-haven status amid some repositioning trade ahead of the latest US consumer inflation figures, due for release later today. This, in turn, remains supportive of the bid tone surrounding the GBP/USD pair, though traders prefer to wait on the sidelines ahead of the key central bank event risks.

The Fed is scheduled to announce its policy is scheduled to announce its policy decision at the end of a two-day meeting on Wednesday. This will be followed by the BoE meeting on Thursday, which will play a key role in influencing the GBP and provide some meaningful impetus to the GBP/USD pair. In the meantime, the aforementioned fundamental warrants some caution before positioning for an extension of the recent bounce from the 1.2500 psychological mark, or the monthly low touched last Friday.

Technical levels to watch