GBP/USD turns sideways after a downside move from 1.1700, US Inflation in focus

• GBP/USD is juggling around 1.1680 ahead of US Inflation and UK Employment data.
• The lower inflation situation will force the Fed policymakers to scale down their ‘hawkish tone.
• The UK jobless rate is seen as stable at 3.8% and an improvement in the labor cost index is music to the ears.

The GBP/USD pair is displaying a lackluster performance in the early Tokyo session as investors are awaiting the release of the US Consumer Price Index (CPI) data. The cable is oscillating in a narrow range of 1.1675-1.1685, followed by a decline after facing barricades around the critical resistance of 1.1700. The asset has displayed exhaustion signals while attempting to cross the round-level resistance of 1.1700, which indicates a minor correction ahead.

Considering the market estimates, the plain-vanilla CPI figure is seen at 8.1%, lower than the prior release of 8.5%. As gasoline prices have witnessed a serious decline, and the price pressures have started responding inversely to the higher interest rates, the forecasts for interest rates have trimmed dramatically. Adding to that, the core CPI that doesn’t inculcate food and energy prices is expected to rise to 6% vs. the 5.9% reported earlier.

There is no denying the fact that the Federal Reserve (Fed) will stick to its ‘hawkish’ stance on interest rates as the road destined to reach the desired inflation rate of 2% is far from over. However, a decline in the inflationary pressures will scale down the ‘hawkish’ tone as the Fed would have the luxury to go slow due to the decent response shown by the price rise index on interest rates.

On the UK front, investors are looking for employment data, which will have a significant impact on pound bulls. The Unemployment Rate is expected to remain unchanged at 3.8%. While the number of individuals claiming jobless benefits will decline by 9.2k. The Average Earnings data will improve significantly by 5% vs. 4.7%, which will support the households to offset the higher payouts led by soaring inflation.