• The UK jobless rate fell from 4.4% in May to 4.2% in June.

• After the UK employment report, investors reduced the likelihood of a September BoE cut from 38% to 35%.

• Traders remained cautious as they awaited US wholesale inflation data.

The GBP/USD outlook shows increased bullish enthusiasm, with the pound rallying after better-than-expected UK employment figures. At the same time, investors remained cautious ahead of US wholesale and consumer inflation figures that will shape the outlook for Fed rate cuts.

Data on Tuesday revealed that the UK unemployment rate unexpectedly fell. Notably, the jobless rate fell from 4.4% in May to 4.2% in June. A resilient labor market will likely keep BoE rate cut expectations low. Consequently, after the report, investors reduced the likelihood of a September BoE cut from 38% to 35%. Recently, the central bank started its rate-cutting cycle. However, some policymakers believe service inflation remains relatively high.

Nevertheless, UK wage growth fell to its lowest point in almost two years, indicating that inflation pressures are easing. Slower pay growth means weaker consumer spending, allowing price pressure to continue falling.

Meanwhile, traders remained cautious as they awaited US wholesale inflation data. The PPI report is a crucial indicator of future consumer prices. Therefore, cooling prices will solidify bets for a September Fed rate cut.

At the same time, the consumer inflation report is due on Wednesday. Economists expect inflation to hold at 3.0% in July. If it meets expectations or comes in lower, there will be more confidence in a September cut. On the other hand, a surprise jump could lower bets for a 50 bps cut.

GBP/USD key events today

• US core PPI m/m
• US PPI m/m

GBP/USD technical outlook: Price is on the cusp of a new peak

On the technical side, the GBP/USD price is on the verge of making a higher high. The price recently reversed from its downtrend after a bullish RSI divergence. Currently, it sits above the 30-SMA, with the RSI heading for the overbought region.

However, bulls face a solid barrier comprising the 1.2800 resistance and the 0.382 Fib retracement level. A break above this level would allow the price to make a higher high and confirm the new uptrend. Moreover, it will enable GBP/USD to climb to the next barrier at 1.2900.

https://www.forexcrunch.com/blog/2024/08/13/gbp-usd-outlook-sterling-rallies-as-uk-jobless-rate-falls/