GBP/USD Regains Some Ground Lost Near 1.2550 Prior to Employment and US CPI Data from the United Kingdom

The GBP/USD pair maintains its upward trend in early Asian trading on Monday. Since its nadir of 1.2500 on Friday, the pair has regained some ground and is currently trading near 1.2551, an increase of 0.03% on the day. The nonfarm payrolls for the United States exceeded market expectations. Traders are anticipating this week's pivotal events from the FOMC and BoE meeting, which have the potential to incite market volatility.

Andrew Bailey, governor of the Bank of England (BoE), cautioned last month that it was premature to contemplate interest rate reductions and that there was "no room for complacency" regarding inflation, notwithstanding the Consumer Price Index's decline from 6.7% in September to 4.6% in October. It is probable that the BoE will maintain borrowing costs at a 15-year high during its December meeting on Thursday.

In November, US Nonfarm Payrolls exceeded market expectations by generating 199K additional positions for the US economy, compared to the 150K payroll additions reported in October. Additionally, there was a decrease in the unemployment rate from 3.9% to 3.7%, and the average hourly wage remained constant at 4.0% year-over-year.

Jerome Powell, chairman of the US Federal Reserve (Fed), stated last week that it would be imprudent to conclude with certainty that the Fed has attained an inflation-taming stance that is sufficiently restrictive as of earlier this month. Powell further stated that Americans are ready to implement additional policy restrictions should the need arise. However, investors formulated the hypothesis that the positive US Nonfarm Payrolls (NFP) report might sway the Federal Reserve (Fed) to postpone the 2024 rate cut.

Tuesday's employment data from the United Kingdom, including the Employment Change, Claimant Count Change, and ILO Unemployment Rate, will be closely monitored by market participants. Additionally, later on Tuesday, the US inflation data, as measured by the US Consumer Price Index (CPI), will be released. The attention will then transition to the policy meeting of the BoE on Thursday and the US FOMC meeting on Wednesday.