GBP/USD flat after UK labor market data, eyes on US CPI

• GBP/USD remains under pressure near 1.3050 as cautious market sentiment overshadows the brief recovery sparked by UK employment data.
• US CPI data will be Wednesday's highlight.
• Markets will also follow Tuesday's US presidential debate.

The GBP/USD pair remains on the defensive, slipping toward 1.3050 during the American session. Despite a temporary boost from positive UK employment data earlier in the day, the pair struggles to hold its ground amid a cautious market atmosphere.

On Tuesday, the UK's Office for National Statistics (ONS) revealed that the ILO Unemployment Rate slightly decreased to 4.1% for the three months ending in July, down from 4.2%, aligning with market expectations. Employment figures showed significant improvement, with an increase of 265,000 jobs during the same period, compared to the previous rise of 97,000. Meanwhile, annual wage growth, as indicated by the Average Earnings Excluding Bonus, slowed to 5.1% from 5.4%.

The upcoming US inflation data will be in focus this week, with the August Consumer Price Index (CPI) set to be released on Wednesday. Headline inflation is anticipated to ease to 2.6% YoY, down from 2.9% in July, while core inflation is expected to hold steady at 3.2% YoY. On Thursday, Producer Price Index (PPI) data is expected to show a decrease in headline inflation to 1.7% YoY, compared to 2.2% in July. Meanwhile, expectations for Federal Reserve easing have stabilized, with the likelihood of a 50 basis point rate cut this month dropping to 20-25%. The market continues to anticipate 100-125 basis points of easing by the end of the year, with no Fed speakers scheduled until Chair Powell's press conference on September 18.

GBP/USD Technical Outlook

The GBP/USD has fallen below the 20-day Simple Moving Average which paints the outlook with bearishness, at least for the short-term. However, as the pair holds the 100 and 200-day  SMAs the overall outlook remains positive.

In the meantime, indicators including the Relative Strength Index (RSI) and the Moving Average Convergence Divergence (MACD) flattened in negative areas, suggesting that the current bearish pressure is not a threat.

GBP/USD Daily chart