GBP/USD bounces off daily low post-UK jobs data - SHORT

GBP/USD is drawing some dip-buying interest, but the lack of strong follow-through on the intraday uptick is notable. Despite mixed UK jobs data, the British Pound receives some support as it fails to push back against Bank of England (BoE) rate hike expectations. However, the pair faces resistance as the USD demand revives with rebounding US bond yields.

Following the release of UK monthly employment data, GBP/USD has modestly recovered from intraday losses and climbed to the upper end of its daily range during the early European session on Tuesday. Despite this, the spot prices remain below the one-month high of 1.2200 reached on Monday.

The Office for National Statistics reports that the number of people claiming unemployment-related benefits has decreased by 11.2K in February, slightly below the anticipated 12.4K. The previous month's reading has also been revised to a fall of 30.3K in the Claimant Count Change, from the originally estimated 12.9K. Additionally, the jobless rate has held steady at 3.7% during the three months to January, instead of the expected slight increase to 3.8%. These figures, to a larger extent, offset the slowdown in UK wage growth data and do not push back against the market's bets for additional rate hikes by the BoE later this month, lending some support to the British Pound.

However, the USD demand is impeding the GBP/USD pair's upside momentum as the US bond yields recover. The increase in US bond yields is a result of the US authorities' move to limit the fallout from Silicon Valley Bank's (SNB) collapse and is also attributable to some repositioning trades ahead of the US consumer inflation figures. Nevertheless, the expectation that the US central bank will slow or even halt its interest rate-hiking cycle due to the strain on the US banking system could limit any meaningful upside for the US bond yields and restrain the USD bulls from placing aggressive bets.

Traders are likely to remain cautious and await the release of the crucial US CPI report scheduled for the early North American session. This week's US economic docket also features the Producer Price Index (PPI) and monthly Retail Sales figures on Wednesday, which should influence the USD price dynamics and provide some impetus to the GBP/USD pair. However, the focus will remain on next week's key central bank event risks - the outcome of a two-day FOMC meeting on Wednesday, followed by the BoE policy decision on Thursday.