GBP/USD seesaws around mid 1.2000s amid unimpressive UK employment report

• GBP/USD pays little heed to mixed jobs report from the UK.
• UK Claimant Count Change improved in July, Unemployment Rate steadies for three months to June.
• Risk-aversion underpins US dollar rebound but sluggish yields restrict moves ahead of FOMC Minutes.
• Second-tier US data, slowdown chatters will offer additional details for clear directions.

GBP/USD treads water around 1.2050 as the UK employment data fails to impress traders during the initial London open on Tuesday. Also challenging the Cable pair traders is the inaction at the bond markets ahead of Wednesday’s release of the Fed Minutes, not to forget mixed concerns surrounding recession.

As per the latest UK jobs report from the National Statistics, the headline Claimant Count Change improved to -10.533K in July versus -32K expected and -20K prior. Further, the ILO Unemployment Rate matched 3.8% expected and previous readings for three months to June.

Also read: UK ILO Unemployment Rate steadies at 3.8% in June, meets estimates

It should be observed that the Bank of England’s (BOE) push for higher wages seems satisfied with the latest data, suggesting aggressive rate hikes from the “Old Lady”. However, the BOE is already alleged to be slow and hence the GBP/USD buyers couldn’t cheer the data.

Other than the mixed UK data, sluggish yields also challenge GBP/USD traders of late. However, economic slowdown fears join hopes of Fed’s aggression, despite softer US inflation, appear to underpin the US dollar’s safe-haven demand, which in turn keeps the Cable buyers hopeful.

Elsewhere, the British political system appears to be volatile of late as the contenders to the Prime Minister’s (PM) post fail to convince voters that they can freeze energy bills. The same helped Labour Party Leader Keir Starmer to pledge that families would not “pay a penny more” on energy bills this winter after unveiling a £29bn plan, per The Guardian. The political uncertainty also joins the Brexit woes, amid a lack of progress on the Northern Ireland (NI) deal, to keep the GBP/USD buyers in check.

Having witnessed the initial reaction to the UK’s latest employment report, the GBP/USD pair traders should concentrate on the risk catalysts surrounding recession and the UK politics. Also important will be the US Building Permits, Housing Starts and Industrial Production numbers for July.

Technical analysis

A clear downside break of the convergence of the 21-DMA and an upward sloping trend line from mid-July, around 1.2100-2110, keep GBP/USD sellers hopeful. Also suggesting the pair’s further downside is the descending RSI (14), not oversold, as well as a looming bear cross on the MACD.

That said, the pair is likely declining towards the horizontal area comprising multiple levels marked since June, around 1.1930. However, the 1.2000 psychological magnet may offer an intermediate halt during the anticipated fall.