GBP/USD resumes upside journey towards 1.2600 as hawkish Fed bets falter

• GBP/USD has resumed its north-side journey as the USD Index has sensed barricades after a less-confident recovery.
• Easing US labor market conditions have faltered expectations of more interest rate hikes from the Fed.
• Higher earnings and upbeat UK Employment would put more pressure on the BoE ahead.

The GBP/USD pair has resumed its upside journey towards the round-level resistance of 1.2600 after a small intervention around 1.2560 in the early London session. Sheer strength in the Cable has been built due to a significant decline in the US Dollar Index (DXY).

S&P500 futures have increased losses in Europe amid a mild caution in the market sentiment as investors are awaiting the release of the United States Consumer Price Index (CPI) (May), which will release on Tuesday.

The USD Index is facing stiff barricades around 103.41 after a less-confident pullback move made after printing a low of 103.30. Investors are dumping positions in the US Dollar after US weekly jobless claims jumped significantly by 28K to 261K for the week ending June 02 vs. upwardly revised expectations of 235K. A 19-month high US Initial Jobless Claims release shows that labor market conditions are not tight enough and the Federal Reserve (Fed) could consider a pause in the policy-tightening spell actively.

For further guidance, US inflation data will be keenly watched. Headline inflation is seen softening to 4.2% vs. the prior release of 4.9%. Core CPI that strips of oil and food prices is expected to accelerate marginal to 5.6% vs. the former release of 5.5%. If core inflation continues to remain persistent, Fed chair Jerome Powell could be more favorable for the continuation of the policy-tightening spell.

Meanwhile, the Pound Sterling would also remain on tenterhooks amid the release of Tuesday’s Employment data (May). As per the preliminary report, Claimant Count Change is expected to drop by 9.6K against a significant increase of 46.7K. The Unemployment Rate is expected to increase to 4.0% vs. the prior release of 3.9%.

Apart from that, three-month Average Earnings excluding bonuses (April) will be keenly watched. The economic data is expected to accelerate to 7.0% vs. the former release of 6.7%. Households equipping higher liquidity for disposal would propel the overall demand and eventually inflationary pressures, which would put more pressure on the Bank of England (BoE) ahead.