GBP/USD remains below 1.3050 following UK labor data

• GBP/USD remains subdued after the release of the mixed UK employment data on Tuesday.
• The UK ILO Unemployment Rate (3M) (Aug) eased to 4.0%, down from July’s 4.1% reading.
• Fed’s Kashkari reiterated the central bank’s data-dependent approach, highlighting the ongoing easing of inflationary pressures alongside a strong labor market.

GBP/USD edges lower after registering gains in the previous two sessions, trading around 1.3040 during the Asian trading hours on Tuesday. The pair remains subdued following the mixed employment data release from the United Kingdom (UK).

The UK ILO Unemployment Rate eased to 4.0% in the three months leading up to August, down from July’s 4.1% reading and below the market forecast of 4.1%. Employment Change for August showed an increase of 373,000, up from 265,000 in July. Meanwhile, Average Earnings excluding Bonuses rose by 4.9% year-on-year in the three months to August, in line with expectations, though slightly lower than the 5.1% growth recorded in July.

The US Dollar (USD) gains support from increasing expectations that the US Federal Reserve (Fed) will avoid aggressive interest rate cuts, following a strong jobs report and concerns of sticky US inflation. According to the CME FedWatch Tool, markets are currently pricing in an 88.2% probability of a 25-basis-point rate cut in November, with no anticipation of a larger 50-basis-point reduction.

On Monday, Federal Reserve (Fed) Bank of Minneapolis President Neel Kashkari reaffirmed the Fed’s data-dependent approach. Kashkari reiterated familiar Fed policymaker views on the strength of the US economy, noting continued easing of inflationary pressures and a robust labor market, despite a recent uptick in the overall unemployment rate, per Reuters.