Ella 
GBP/USD remains above 1.2500, lacking firm direction.
The UK’s unemployment rate rose to 4.3% in the three months to July from the previous value of 4.2%.
Talk of higher U.S. long-term interest rates boosted the dollar.
Investors will focus on Wednesday’s UK monthly GDP report and the US Consumer Price Index (CPI).
GBP/USD has consolidated recent losses above the 1.2500 area during early European trade on Tuesday. The pair is currently trading around 1.2515, up 0.04% on the day.
The latest data from the Office for National Statistics showed that the UK unemployment rate rose to 4.3% in the three months to July from the previous value of 4.2%, in line with market consensus. Meanwhile, employment fell by 207,000 in July, compared with a decline of 66,000 in the previous month, worse than expectations for a decline of 185,000. Average earnings, including bonuses, rose 8.5% in the three months to July, compared with 8.2% in the previous month. Excluding bonuses, the figure was still 7.8%, in line with expectations.
Bank of England (BOE) policymaker Catherine Mann said on Monday that it was too early for the central bank to pause raising interest rates and that it would be better for the central bank to raise interest rates too high rather than stop raising interest rates too early. Hawkish comments from Bank of England policymakers could limit the downside for GBP and act as a tailwind for GBP/USD.
Across the ocean, the US’s “higher interest rates are better” argument lifted the dollar’s exchange rate against the pound. Markets have priced in a 92% chance of no change at the September meeting and a 42.4% chance of a rate hike at the November meeting, according to CME FedWatch Tool.
U.S. Treasury Secretary Janet Yellen said on Sunday she was increasingly confident the United States could curb inflation without a major impact on the labor market. She added that every indicator of inflation was receding and there was no massive wave of layoffs.
Market participants will turn their attention to the UK’s monthly GDP report and July manufacturing production report due on Wednesday. In addition, the much-anticipated US Consumer Price Index (CPI) data will also be released during the North American session on Wednesday. Traders will find trading opportunities around the GBP/USD currency pair.
