GBP/USD extends the decline below 1.2850 ahead of UK employment data

• GBP/USD weakens to near 1.2840 in Tuesday’s early European session. 
• Investors await the UK job data on Tuesday for fresh impetus. 
• The USD gains ground on Trump trades. 

The GBP/USD pair extends its downside to near 1.2840 on Tuesday during the early European session. The Greenback remains firm as Trump trades continue to rally. Investors will closely monitor the UK employment data, which is due later on Tuesday.

The Bank of England (BoE) decided to cut interest rates by 25 basis points (bps) last week, bringing the bank’s key rate to 4.75%. The BOE Governor Andrew Bailey stated during the press conference that the UK central bank needs to retain a “gradual approach” to policy easing.  

The UK job data on Tuesday will be closely watched as it might offer some hints about the BoE policy decision in the December meeting. The Unemployment Rate in the UK is expected to tick higher to 4.1% in the three months to September from 4.0% in the quarter ending August. 

Additionally, the Average Earnings Excluding bonuses are projected to grow by 4.7% versus 4.9% prior, while Average Earnings including bonuses are estimated to rise by 3.9% from the prior release of 3.8%. If the report shows a stronger-than-expected outcome, this could support the Pound Sterling (GBP) against the USD. 

On the USD’s front, a possibility that the Trump administration will propose policies, including steep tariffs, tax cuts, and interference with the Federal Reserve’s monetary policy, might boost the USD and bond yields. Fed officials are likely to reinforce the cautious tone this week, and traders will take more cues from the release of the US Consumer Price Index (CPI), Producer Price Index (PPI), and Retail Sales reports later this week.