• UK unemployment claims fell sharply from 102,300 to 23,700.

• After the nonfarm payrolls report, the likelihood of a 50 bps September Fed rate cut fell.

• Economists predict soft US inflation figures on Wednesday.

The GBP/USD price analysis shows a brief rebound due to positive UK employment data. Nevertheless, the downtrend remains intact as the dollar strengthens ahead of Wednesday’s US Consumer Price Index report.

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Data on Tuesday revealed that the UK labor market has remained mostly resilient despite high interest rates. Despite some softness, employment remains high. Notably, unemployment claims fell sharply from 102,300 to 23,700. However, wage growth slowed to an over two-year low, supporting more rate cuts by the Bank of England.

Experts believe the BoE will continue cutting rates but will do so gradually. Similarly, Friday’s jobs report boosted the dollar as it showed both weakness and strength. The US labor market has declined in recent months. Job growth has slowed significantly, and the unemployment rate has jumped, solidifying expectations for a rate cut.

However, there is still a debate on whether it will be a massive or small cut. After the nonfarm payrolls report, the likelihood of a 50 bps rate cut fell as the unemployment rate eased. However, there is one more major report that might shift this outlook.

Economists predict soft inflation figures on Wednesday. The annual number might come in at 2.6%, closer to the 2% target. Bigger-than-expected easing could increase bets for a massive rate cut. Otherwise, the Fed will likely settle for a small rate cut.

GBP/USD key events today

Investors will keep digesting UK employment figures as no more key reports will come out today.

GBP/USD technical price analysis: Bullish pullback could pause at 30-SMA

On the technical side, the GBP/USD price is rising to retest the 30-SMA. However, the bearish bias remains since it trades below the 30-SMA with the RSI under 50. Notably, bears showed massive strength when the price revisited the 1.3200 key level. It bounced lower with a strong bearish candle, pushing below the 30-SMA.

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The current move might reach the 30-SMA before bears emerge. If they return, the price will fall to face a solid support zone comprising the 0.5 Fib and 1.3000 key psychological levels. A break below this zone will strengthen the bearish bias.

https://www.forexcrunch.com/blog/2024/09/10/gbp-usd-price-analysis-uk-employment-gains-fuel-rebound/