GBP/USD recaptures psychological resistance

Amid a positive market mood, the GBP/USD pair has managed to scales above 1.2000 after a mild correction. Investors focus now on UK Inflation, lower earnings and higher inflation rates may create more problems for the households in the UK.

Declining inflation expectations in the US may hurt the Dollar Index further. The GBP/USD pair has rebounded firmly after picking bids below 1.2000 in the early Tokyo session. The pair is still in the grip of bulls amid a risk-on market impulse, which has improved the favorability of the risk-perceived assets.

The pound bulls remained positive on Tuesday despite the release of the subdued UK employment data. The Unemployment Rate remained flat at 3.8%. However, the Claimant Count Change tumbled to 20K from the prior release of -34.7k.

Average Hourly Earnings plunged to 6.2% from the expectations of 6.9% and the prior release of 6.8%. investors are aware of the fact that the UK economy is facing the headwinds of higher price pressures led by higher energy bills and food prices.

Lower earnings along with price pressures are going to hurt the sentiment of the market participants dramatically.