• The GBP/USD price analysis suggests increasing expectations for Bank of England rate cuts.

• The UK labor market was weaker in the three months to April.

• Market participants are awaiting the US consumer inflation report.

The GBP/USD price analysis suggests increasing expectations for Bank of England rate cuts this year after downbeat UK employment data. Meanwhile, market participants remain cautious ahead of crucial US inflation figures. 

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Data on Tuesday revealed that the UK labor market was weaker in the three months to April. The unemployment rate reached an almost four-year high, rising from 4.5% to 4.6%. At the same time, wage growth slowed sharply from 5.5% to 5.2%. 

The downbeat figures increased BoE rate cut expectations and weighed on the pound. Before the report, traders were 39-bps of rate cuts this year. This figure increased to 48-bps after the data. 

Meanwhile, market participants are awaiting the US consumer inflation report, scheduled for release on Wednesday. According to estimates, inflation increased by 0.2% in May. Meanwhile, the annual figure increased by 2.5%, above the previous reading of 2.3%. 

A hotter-than-expected reading would confirm the Fed’s fears that Trump’s tariffs have increased price pressure. Moreover, it would lower Fed rate cut expectations, boosting the dollar. On the other hand, if inflation is softer, it will weigh on the dollar by increasing bets for a Fed rate cut.

GBP/USD key events today

• US core CPI m/m
• US CPI m/m
• US CPI y/y

GBP/USD technical price analysis: Bears find their feet below the 30-SMA

On the technical side, the pound is finding its feet below the 30-SMA after a recent shift in sentiment. Meanwhile, the RSI trades nearer the oversold region, indicating solid bearish momentum. However, after a strong break below the SMA, momentum has eased, and price action shows hesitation to continue lower. The price is now making small-bodied candles. 

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Nevertheless, the bearish bias has strengthened, and the path is clear for GBP/USD to reach the 1.3400 support level. A break below this level will strengthen the bearish bias and allow the price to target the 1.3200 support. 

However, if the level holds firm, bulls might return for a pullback. However, the bearish bias will remain strong as long as the price stays below the 30-SMA.

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