British Pound Recovers Slight Losses Against US Dollar, JOLTS Data Eyed

• The British Pound recovers minor losses against the US Dollar after the DXY retreats from 101.50.

• Market experts see the US Dollar remaining firm due to hawkish Fed expectations.

• Investors keenly await the US JOLTS Job Openings data for August.

The British Pound (GBP) claws back some of its early losses, but is still 0.14% down at around 1.3235 against the US Dollar (USD) during the European trading session on Tuesday. The GBP/USD pair recovers slight gains as the US Dollar Index (DXY) retreats after revisiting its two-month high of 101.50 to near 101.35.

The outlook of the US Dollar remains as traders are increasingly confident that the Federal Reserve (Fed) will deliver more interest rate hikes this year.

Dollar support reinforced as Fed path and energy prices align

Analysts at MUFG/BTMU highlight that, after delivering their first hike this month, the US rate market now expects the Fed to deliver "almost another 100bps of rate hikes in the year ahead," a trajectory that is "reinforcing support for the US Dollar from the positive terms of trade shock for the US economy from higher energy prices." In their view, this combination of tighter Fed policy expectations and elevated energy costs means "the current backdrop is supportive of the US Dollar remaining stronger for longer."

During the day, investors will focus on the US JOLTS Job Openings data for August, which will be published at 14:00 GMT. The US Job Openings report will likely show that US employers posted 7.23 million fresh jobs, marginally lower than 7.271 million in July.

This week, the major trigger for the US Dollar will be the US Nonfarm Payrolls (NFP) data for September, which will be published on Friday. The data is expected to significantly influence Fed’s interest rate expectations.

Meanwhile, the British Pound struggles to gain ground despite hawkish Bank of England (BoE) repricing. Strategists at Brown Brothers Harriman (BBH) highlight that “the swaps curve continues to imply about 100bps of BoE rate hikes in the next twelve months to 4.75%.”

However, BBH argues that the “BoE may not need to tighten as much as markets expect,” given that “the UK economy is already operating below capacity,” the “Bank Rate at 3.75% is near the top of the BoE’s estimated 2% to 4% neutral range.”

GBP/USD Technical Analysis

In the daily chart, GBP/USD trades at 1.3239, maintaining a bearish near-term bias as spot holds beneath the 20-period exponential moving average (EMA) at 1.3374. The pair’s inability to reclaim this EMA suggests ongoing topside pressure, while the Relative Strength Index (RSI) at 29.3 hovers near oversold territory, hinting that downside momentum could be stretched but not yet reversed.

On the topside, immediate resistance is located at the 20-period EMA at 1.3374, which acts as the first barrier that bulls would need to clear to alleviate the current bearish tone. With no nearby technical supports derived from the provided dataset, the focus remains on whether GBP/USD can stage a recovery toward this moving average or instead continue to drift lower while the RSI lingers near oversold levels.