The US dollar extended its gains against the British pound in early European session on Tuesday, as weak macroeconomic data weighed down on GBPUSD. The currency pair traded at a three-day low of 1.27800 at the time of writing, ahead of a much-anticipated release of US inflation data. BoE policymaker Catherine Mann’s hawkish-leaning comments failed to support the pound, as traders gave greater weight to the UK labour market numbers.
The U.K. Employment Change in the three-month period to January saw 21,000 people lose their jobs, higher than the forecast figure of 10,000 new employees. In addition, the unemployment rate during the period rose by 0.1% to 3.9%, exceeding the forecast figure of 3.8%. These figures neutralized the effect of Claimant Count Change, in February, which saw the number of unemployed people in the UK reduce to 16.8k, lower than the expected 20.3k.
GBPUSD’s trajectory will be defined by the US CPI data for February, which will come out when both the London and New York markets are in session. The year-on-year Core CPI reading is forecasted to come at 3.7%, slightly lower than the January figure of 3.9%, but still higher than the Fed’s target figure of 2%. The Core CPI is projected to read 0.3% month-on-month, which is slightly lower than the January figure.
Beyond inflation figures, the GBPUSD pair could also get momentum from the 10-Year US Treasury Note auction. Yields on US Treasuries have fallen in recent days, and this has contributed to weakening of the US dollar.
Technical analysis
GBPUSD is on a bearish momentum, and the sellers will be in control as long as the currency pair trades under the 1.2840 pivot. This will likely see them breach the 1.2790. Extended control beyond that level could see the pair test 1.2770. Alternatively, if the buyers push to keep the price above the pivot point, GBPUSD could break the 1.2860 resistance, at which point the bearish narrative will be invalid, and 1.2880 will be within reach.
