GBP/USD clings to modest gains above mid-1.2800s, moves little post-UK employment details

• GBP/USD managed to regain positive traction for the second consecutive session on Tuesday.
• The uptick was sponsored by sustained USD selling; no-deal Brexit fears capped the upside.
• The GBP bulls seemed rather unimpressed by Tuesday’s mostly upbeat UK monthly jobs data.

The GBP/USD pair held on to its modest gains near session tops, just above mid-1.2800s and had a rather muted reaction to the UK macro data.

Following the previous day's pullback of around 70-75 pips and an early downtick to the 1.2815 region, the pair managed to regain some positive traction for the second consecutive session on Tuesday. The uptick was sponsored by sustained selling around the US dollar, which remained depressed amid the prevalent upbeat market mood.

The global risk sentiment remained well supported by renewed optimism over a potential vaccine for the highly contagious coronavirus disease. AstraZeneca resumed the phase-3 trials for its COVID-19 vaccine candidate and Pfizer announced the likelihood of presenting late-stage data for its own vaccine by late October.

Despite the supporting factor, the upside is likely to remain limited amid growing fears of a no-deal Brexit. The UK's Internal Market Bill, which gives the government the power to override part of the Brexit agreement, passed its first hurdle in the House of Commons and further fueled market worries over a hard Brexit.

The GBP bulls seemed rather unimpressed by Tuesday's mostly upbeat UK monthly employment details. According to the ONS, the number of people claiming unemployment-related benefits came in at 73.7K as against 100K expected. Adding to this, the previous month's reading was also revised down to 69.9K from 94.4K reported earlier.

Meanwhile, the unemployment rate during the three months to July edged higher to 4.1% from 3.9%. Given that investors are pre-occupied with developments surrounding the Brexit saga, the data failed to provide any meaningful impetus to the GBP/USD pair. Investors also seemed reluctant to place any aggressive bets ahead of this week's key central bank events – the FOMC on Wednesday and BoE on Thursday.

This makes it prudent to wait for some strong follow-through buying before confirming that the recent sharp corrective slide is over and positioning for any further near-term appreciating move for the GBP/USD pair.

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