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GBP/USD prolongs its losses for the second consecutive day on Tuesday as soft data in the United Kingdom (UK) justifies the need for lower interest rates by the Bank of England (BoE). The extension of the government shutdown in the US keeps the schedule light, except for Federal Reserve (Fed) Chair Jerome Powell's speech.

Sterling falls for a second day as unemployment rises and wages ease, bolstering dovish expectations
 

Sterling trades at around 1.3300 after hitting a daily high of 1.3352 and failing to crack last Friday's peak of 1.3370, following the latest employment report in Britain. The data showed that the unemployment rate rose, and wage earnings slowed in the three months to August.

The ILO Unemployment Rate in August increased from 4.7% to 4.8% MoM, while the Employment Change dipped from 232K to 91K, below estimates of 123K people added to the workforce.

Further data showed that Average Weekly Earnings in the three months to August climbed from 4.7% to 5%, but excluding bonuses, dipped from 4.8% to 4.7% for the same period.

This data provides reasons for doves at the Bank of England to cut interest rates. Nevertheless, market participants remain skeptical of further easing this year, as they expect the next cut until March 2026.

Trade tensions between the US and China pushed the US Dollar lower, as depicted by the US Dollar Index (DXY), which tracks the buck’s value against six currencies, down 0.07% at 99.17. Traders are eyeing the Fed Chair Jerome Powell's speech, late in the day.

Data in the US revealed that small business sentiment declined in September, due to expectations of unfavorable operating conditions in the following six months, according to the National Federation of Independent Business (NFIB). The NFIB Business Optimism Index tumbled 2 points to 98.8 last month, the first decline in three months.

GBP/USD Price Forecast: Technical outlook
 

The technical picture indicates GBP/USD is neutral to downward-biased, and a daily close below 1.3300 could set the stage to test lower prices. Momentum is also bearish as depicted by the Relative Strength Index (RSI).

That said, the first support would be 1.3200. A breach of the latter will expose the 200-day Simple Moving Average (SMA) at 1.3178. Conversely, if GBP/USD climbs above 1.3300, the next resistance would be 1.3350, followed by the 20-day SMA at 1.3434. The next key resistance lies at the 50-day SMA and the 100-day SMA, each at 1.3472 and 1.3488, respectively.
 

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