GBP/USD regains positive traction on Tuesday

: George Solotarov; 17 January 2023; Hits: 293

GBP/USD regains positive traction on Tuesday

The GBP/USD pair attracts fresh buying near the 1.2170-1.2165 region on Tuesday and steadily climbs back closer to a one-month high touched the previous day. The pair, however, trims a part of its intraday gains and retreats below mid-1.2200s during the early North American session. The British Pound strengthens a bit following the release of the UK monthly employment details, which, in turn, is seen pushing the GBP/USD pair higher. The UK Office for National Statistics (ONS) reported that Average Earnings, both including and excluding bonuses, climbed 6.4% in the September-to-November period.

Furthermore, the number of people claiming unemployment-related benefits fell to 19.7K in December from 30.5K previous and the jobless rate held steady at 3.7%, close to its lowest level in almost 50 years. This could add pressure on the Bank of England to raise interest rates by another 50 bps at the next policy meeting and provides a modest lift to the domestic currency.

The US Dollar, on the other hand, struggles to preserve its modest intraday gains and offers additional support to the GBP/USD pair. That said, a combination of factors continues to act as a tailwind for the greenback and keeps a lid on any further gains for the major, at least for the time being. A goodish intraday pickup in the US Treasury bond yields, along with a generally weaker tone around the equity markets, should limit the downside for the safe-haven buck. This, in turn, makes it prudent to wait for strong follow-through buying beyond the 1.2300 mark before traders start positioning for an extension of the pair's recent appreciating move witnessed over the past one-and-half-week or so. Next on tap is the release of the Empire State Manufacturing Index, which, along with the US bond yields and the broader risk sentiment, might influence the USD and provide some impetus to the GBP/USD pair. The focus will then shift to the latest UK consumer inflation figures due on Wednesday. Apart from this, the US Producer Price Index and monthly Retail Sales figures will be looked upon to determine the near-term trajectory for the GBP/USD pair.