British Pound recovers slight losses against US Dollar, JOLTS data eyed

The British Pound (GBP) experienced a minor rebound against the US Dollar (USD), settling around 1.3235 following early losses. This recovery came as the US Dollar Index (DXY) softened after reaching its two-month peak of 101.50, and halted near 101.35. Traders are banking on the Federal Reserve (Fed) to issue further interest rate hikes this year, boosting confidence in the US Dollar.

Analysts from MUFG/BTMU noted that, after their initial rate hike this month, the Fed is now expected to deliver almost another 100 basis points of hikes in the coming year, bolstering the strength of the USD. This combination of tighter Fed policy expectations and high energy prices has reinforced the support for the USD remaining robust for an extended period.

During the trading day, investors will keep an eye on the US JOLTS Job Openings data for August, released at 14:00 GMT. The report is likely to reveal 7.23 million new jobs, slightly lower than the 7.271 million added in July. The upcoming US Nonfarm Payrolls (NFP) data for September, published on Friday, will be a major factor in shaping Fed's interest rate expectations.

Meanwhile, the GBP has been struggling to gain traction despite hawkish remarks from the Bank of England (BoE). Strategists at Brown Brothers Harriman (BBH) observed that "the swaps curve still suggests around 100 basis points of BoE rate hikes in the next twelve months, reaching 4.75%." However, they argued that "the BoE may not need to tighten as much as markets anticipate," considering the UK economy is already operating below capacity, and the Bank Rate at 3.75% is nearing the top of the BoE's estimated 2% to 4% neutral range.

In the daily chart, GBP/USD trades at 1.3239, displaying a bearish outlook in the short term as the price remains below the 20-period exponential moving average (EMA) at 1.3374. The Relative Strength Index (RSI) at 29.3 indicates the pair is near oversold territory, signaling that downside momentum may continue but not yet reversed.

The immediate resistance for GBP/USD is the 20-period EMA at 1.3374, which must be overcome by bulls to alleviate the current downtrend. With no nearby technical support from the given data, the focus remains on whether GBP/USD can recover toward this moving average or continue to decline while the RSI stays near oversold levels.