Pound Sterling trades back and forth as investors shift focus towards the UK Employment data.

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• Pound Sterling trades back and forth as investors shift focus towards the UK Employment data.
• Soft wage growth data would soften inflation outlook and increase expectations of the BoE cutting interest rates.
• Market volume to remain thin amid extended weekend in US markets.

The Pound Sterling (GBP) remains muted as investors await the United Kingdom labor market data for three-months ending November, which will be published on Tuesday. Investors are anticipating a sharp decline in the wage growth and see labor market conditions cooling further due to higher interest rates by the Bank of England (BoE) and deepening cost-of-living crisis amid stubborn consumer inflation.

Soft wage growth data would improve progress in inflation returning towards 2% as lower earnings will eventually result in a decline in households’ spending power. Stubbornly higher wage growth has remained a major booster of sticky consumer price inflation and a decline in the same will provide more relief to BoE policymakers.

The GBP/USD pair is likely to remain inside the woods as the United States markets are closed on Monday. Trading volume is expected to remain thin due to an extended weekend. However, persistent bets in favour of rate cuts from the Federal Reserve (Fed) in the March monetary policy meeting would keep the US Dollar Index (DXY) on the backfoot.

Pound Sterling trades listless above the crucial support of 1.2700 as investors await the crucial UK data for further action. The GBP/USD pair has oscillated in a range between 1.2674-1.2784 for the past week. The broader appeal is still bullish as the 20 and 50-day Exponential Moving Averages (EMAs) are sloping higher. The 14-period Relative Strength Index (RSI) oscillates in the 40.00-60.00 range, indicating a consolidation ahead. Fresh upside in Cable is expected if it manages to climb above five-month high around 1.2820.

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