GBP/USD stays under modest bearish pressure and trades below 1.2600 on Tuesday. Earlier in the day, the pair edged higher with the initial reaction to the UK labor market data, which showed that the Unemployment Rate held steady at 4.4% in the three months to December.
The Relative Strength Index (RSI) indicator on the 4-hour chart holds above 60 and GBP/USD continues to trade above the 20-period Simple Moving Average, reflecting sellers' hesitancy.
In case GBP/USD continues to use 1.2600 (round level) as support, it could face the next resistance at 1.2650 (Fibonacci 78.6% retracement of the latest downtrend) before 1.2700-1.2710 (round level, static level). On the downside, supports could be seen at 1.2530 (Fibonacci 61.8% retracement), 1.2500 (round level, static level) and 1.2460-1.2450 (100-period Simple Moving Average, Fibonacci 50% retracement).
The UK's Office for National Statistics (ONS) reported early Tuesday that the ILO Unemployment Rate held steady at 4.4% in the three months to December. This reading came in better than the market forecast of 4.5%. Additionally, the Employment Change rose by 107,000 in this period, up sharply from 35,000 reported for the previous month. Finally, the annual wage inflation, as measured by the change in the Average Earnings Including Bonus, climbed to 6% from 5.6%. These figures seem to be helping Pound Sterling stay resilient against the US Dollar (USD).
In the meantime, while participating in a panel discussion titled "Preserving and enhancing open financial markets" at an event in Brussels on Tuesday, Bank of England (BoE) Governor Andrew Bailey acknowledged that they are in a period of heightened uncertainty and added that they are facing a weak growth environment in the UK.
The economic calendar will not feature any high-impact data releases on Tuesday. In case risk flows dominate the action in the financial markets in the second half of the day, GBP/USD could regain its traction. At the time of press, US stock index futures were up between 0.1% and 0.3%.
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