GBP/USD holds gains around 1.2570 inspired by upbeat UK Employment, US CPI remains key
- GBP/USD has locked gains originated after the release of the solid UK labor market data.
- Investors have started getting precautionary ahead of the United States CPI data.
- More interest rate hikes by the BoE are highly expected as the battle against persistent inflation is far from over.
The GBP/USD pair is holding gains generated after the release of the upbeat United Kingdom Employment data. The Cable is expected to continue its upside journey toward the round-level resistance of 1.2600 as the USD Index (DXY) is struggling to show a solid recovery from 103.30.
S&P500 futures have surrendered the majority of gains added till early London. It seems that investors have started getting precautionary ahead of the United States Consumer Price Index (CPI) data.
The street is convinced that US headline inflation would soften dramatically due to consistently falling energy prices, however, sheer stubbornness in anticipated in core inflation figures as the demand for durables has remained strong and the service sector is still resilient.
The impact of soft inflation numbers would propel the need for a skip in the policy-tightening spell by the Federal Reserve (Fed).
Meanwhile, solid United Kingdom Employment data are demonstrating resilience in the economy. The Claimant Count Change (May) saw a massive decline of 13.6K while the street was anticipating a decline of 9.6K. In the past month, Claimant Count Change soared by 23.4K. Three-month Unemployment Rate (April) slipped to 3.8% vs. the estimates of 4.0% and the former figure of 3.9%
Apart from that, the economic indicator which was crucial for investors was the Average Earnings excluding bonuses data. The economic data soared to 6.5% against the consensus and the former release of 6.1%. UK households equipped with higher earnings for disposal are going to accelerate the overall demand, which eventually will heat up inflationary pressures further.
More interest rate hikes by the Bank of England (BoE) are highly expected as the battle against persistent inflation is far from over.