British Pound Holds Positive Ground Near 1.3450 After UK Employment Data

The GBP/USD pair holds positive ground near 1.3450 during the early European trading hours on Tuesday. The British Pound (GBP) strengthens against the US Dollar (USD) following the UK employment report. Attention will shift to the UK Consumer Price Index (CPI) inflation data, which is due later on Wednesday. 

Data released by the Office for National Statistics (ONS) on Tuesday showed that the UK ILO Unemployment Rate remained steady at 4.9% in the three months to May. This figure came in below the market consensus of 5.0%.

Meanwhile, the number of people claiming unemployment benefits increased by 6.7K in June, versus a revised increase of 1.3K prior, better than the expected 28.3K gain. The Employment Change data arrived at 147K in May against 100K seen in April.   

The Cable edges slightly higher in an immediate reaction to the UK jobs data. Traders will take more cues from the UK CPI inflation report on Wednesday for fresh impetus. The headline CPI is expected to see a rise of 2.7% YoY in June, while the core CPI is projected to show an increase of 2.5% during the same period. 

New UK Prime Minister Andy Burnham took office on Monday and vowed to stick to the fiscal rules, adding that he will not be "taking risks with the economy.” Burnham appointed former Defence Secretary John Healey as Chancellor of the Exchequer.

"It is still unclear exactly what Burnham's economic policy will look like, which is leading to significant confusion, hence the selloff in the bond market on Monday,” said Kathleen Brooks, research director at XTB. 

Traders will closely monitor the developments surrounding US-Iran tensions. CNBC reported on Tuesday that US airstrikes on Iran have entered their tenth consecutive day following the deaths of three US service members. US President Donald Trump said on Monday that Iran would pay for the deaths of three US soldiers. 

The Iranian Islamic Revolutionary Guards Corps (IRGC) said that it struck US military targets, including air defence systems in Bahrain and Kuwait. The Iranian military stated that it hit two air defence systems and a radar installation at two different US outposts in Bahrain, as well as missile defence systems and radars and satellite reception systems in Kuwait. Rising tensions in the Middle East could boost a safe-haven currency such as the Greenback and create a headwind for the major pair in the near term.