GBP/USD posts modest gains above 1.3000, traders await US private payroll data 

• GBP/USD trades with mild gains around 1.3025 in Wednesday's early European session.
• UK's Reeves addressed speculation over tax rises ahead of the Autumn Budget later in the month. 
• Traders brace for the US October private payroll and ISM Services PMI on Wednesday. 

The GBP/USD pair posts modest gains near 1.3025 during the early European session on Wednesday, bolstered by a softer US Dollar (USD). However, the potential upside for the major pair might be limited, as UK Finance Minister Rachel Reeves hinted at broad tax rises in her budget later this month. The US October private payroll and ISM Services Purchasing Managers Index (PMI) reports will be published later on Wednesday.

Rachel Reeves, on Tuesday, gave a clearer indication that tax hikes are coming in her Autumn Budget later in November. The Sunday Times reported that Reeves was looking at more than 100 possible tax and spending options, with a focus on the top third of earners. Reeves emphasized her commitment to her fiscal rules and did so again on Tuesday, saying it was "iron-clad." The Cable is likely to stay on the back foot ahead of the UK Autumn Budget on November 26 as expectations mount for tax hikes. 

The Bank of England (BoE) is expected to hold its key interest rate at 4.0% in its upcoming meeting on Thursday, although the decision is considered to be finely balanced. Some believe the UK central bank may wait to see the effect of these fiscal measures before making a rate decision.

Markets have also had to deal with a record-length government shutdown, which has all but halted the flow of macroeconomic data. Traders will closely watch the US private ADP payrolls, which are due later on Wednesday. ADP Nonfarm Employment Change is projected to show 25K jobs added, compared to a 32K loss in the previous reading. In case of a stronger-than-expected outcome, this could underpin the Greenback and create a headwind for the major pair.