GBP/USD aims establishment above 1.1900, spotlight is on UK employment and inflation data

• GBP/USD is expected to balance above 1.1900 as DXY weakens significantly.
• UK’s jobless rate is seen stable at 3.8%. The entire focus will remain on earnings data.
• Rishi Sunak is leading among contenders for Conservative Party leader and UK Prime Minister.

The GBP/USD pair has rebounded strongly after a mild correction towards 1.1880 in the early European session. The cable has refreshed its intraday low at 1.1908 and is expected to extend further amid a sell-off in the US dollar index (DXY).

The DXY has tumbled to near 107.80 and is likely to extend losses as investors are expecting that the price pressures in the US economy are near their peak levels. The consensus is backed by vulnerable oil prices in July and likely lower aggregate demand. Expectations for slippage in the overall demand will shift the raw-material prices lower and therefore, result in a sigh of relief for the inflation rate. Although the odds for a mega rate hike by the Federal Reserve (Fed) will remain stable.

On the UK front, investors are awaiting the release of the employment figures and inflation data. The Unemployment Rate is seen as stable at 3.8%. The focus will remain on the Average Hourly Earnings data. In times, when individuals are facing the headwinds of red-hot inflation, lower earnings will dampen the market mood.

The UK Consumer Price Index (CPI) is seen higher at 9.3% vs. 9.1% recorded earlier. Also, the core CPI could improve minutely to 6% from the prior release of 5.9%. This will compel the Bank of England (BOE) to elevate interest rates further.

Meanwhile, investors have ignored political jitters in the UK economy. Rishi Sunak is leading among the contenders for the leader of the Conservative Party and the UK’s Prime Minister. It will be interesting to see who will grab the second spot and will go head-to-head with Sunak.