• The GBP/USD forecast remains feeble after downbeat UK employment data.
• The US dollar remains firm amid easing US-China trade worries.
• All eyes are now on key central bank speeches that could provide clues on the easing cycle.

The GBP/USD price weakened on Tuesday, falling below the 1.3300 mark amid softer-than-expected UK labor market data. It reinforced the odds of additional rate cuts by the Bank of England.

According to the Office for National Statistics, the UK ILO unemployment rate surged to 4.8%, up from the previous 4.7%, slightly above the market forecast. The employment grew by 91k, well below the previous 232k reading, suggesting a slowdown in hiring momentum. The jobless claims soared to 25k, well above the 10k forecast. Wage growth also signaled weakness as average earnings, including bonuses, slowed to 4.7%. However, excluding bonuses, the average earnings briefly rose to 5%, above the BoE’s comfort zone.

The data reinforced the perception that the UK economy is weakening, prompting investors to bet on the probability of further easing. The markets now anticipate a 70% chance of a 25 bps rate cut before year-end, as policymakers would aim to support household consumption amid rising labor market weakness.

BoE’s MPC member, Megan Greene, noted, “Monetary policy remains restrictive, but further rate cuts could be warranted if inflation continues to drift lower to 2% target.” However, she warned against aggressive rate cuts, given uncertainty around persisting inflation and wage dynamics.

On the other hand, the US dollar index found a firm footing near mid-99.00, supported by easing US-China trade tension and rising expectations that the Fed would proceed with rate cuts more cautiously.
 

GBP/USD Key Events Ahead

Investors are looking forward to two major speeches:

• Fed Chair Jerome Powell’s commentary
• BoE Chair Andrew Bailey’s speech

Both events remain the key to determining the future policy path and probable divergence to forecast the next leg for the pair.
 

GBP/USD Technical Forecast: 1.3200 at Sight
 

(Click on image to enlarge)

GBP/USD 4-hour chart
 

After breaking the demand zone and recent swing low at 1.3260, the GBP/USD price is looking to test the 1.3200, which is a psychological support. The key MAs on the 4-hour chart reveal a strong bearish trend, while the RSI has plunged below 40.0, showing further room for losses.

The key support for the pair emerges at 1.3200 ahead of 1.3125 and then 1.3000. On the upside, the immediate resistance lies at 1.3300, which can be tested if the price bounces and closes the candle above the swing low of 1.3260. The next resistance appears at 1.3335 ahead of 1.3360.

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