GBP/USD treads waters toward 1.2700, focus on US employment data

• GBP/USD experienced losses due to US moderate economic data.
• Investors turn cautious around BoE’s policy decision and the UK’s gloomy economic situation.
• UK’s FCA stated that British savings account holders can take advantage of higher interest rates.

GBP/USD struggles to recover from the previous day’s losses, hovering around 1.2680 during the Asian session on Friday. The pair is under pressure ahead of the releases of employment and manufacturing data from the United States (US).

The GBP/USD lost ground due to the moderate US data released on Thursday. The US Dollar Index (DXY) trades higher around 103.60 at the time of writing. As said, the US Core PCE improved to 4.2% in July as expected, from its previous 4.1%. In addition, US Jobless Claims for the week ending on August 25 showed a reading of 228K against the market consensus of 235K and the previous 232K and indicated that the labor market is still resilient.

However, market participants are taking a cautious stance, seeking fresh impetus around monetary policy tightening in September’s meeting by the Bank of England (BoE) and the gloomy economic situation of the United Kingdom (UK). The pair faced downward pressure despite hawkish sentiment around a 25 basis points (bps) interest rate hike, following the BoE Chief Economist Huw Pill’s hawkish statement made on Thursday. Pill expressed the view that the policy should maintain a significant level of restraint for an extended duration.

Additionally, the UK's Financial Conduct Authority (FCA) stated early Friday morning in Asia, as reported by Reuters, that an increasingly competitive market is leading to more savings accounts offering higher interest rates. The FCA is working to ensure that British savings account holders can swiftly reap the advantages of higher interest rates, similar to how they promptly face increased costs when borrowing money. This initiative aims to create a balanced and equitable financial environment for consumers.

Investors will likely monitor the upcoming data from the US scheduled to be released on Friday, seeking more cues on the economic scenario in the country. These datasets include the US Average Hourly Earnings, Nonfarm Payrolls and ISM Manufacturing PMI.