• GBP/USD is oscillating in a narrow range above 1.2550 as the focus has shifted to UK labor market data.
• S&P500 futures have generated decent losses in Asia as investors are cautious ahead of US debt ceiling talks.
• Shortages of labor and historically high food inflation have remained major catalysts of double-digit UK inflation.

The GBP/USD is displaying topsy-turvy moves above the immediate support of 1.2550 in the early European session. The Cable is showing signs of volatility contraction ahead of the release of the United Kingdom Employment data.

S&P500 futures have generated decent losses in the Asian session as investors are cautious ahead of US debt ceiling talks. The overall market mood seems in favor of the risk-aversion theme as the outcome of the US debt-ceiling negotiations between congressional Republicans and US President Joe Biden would be full of surprises.

Economists at ANZ Bank believe that a deal will be reached to suspend the debt limit for a few months to provide more time to negotiate a mutually satisfactory outcome. Negotiations over that period are likely to be fractious, causing financial market volatility and disrupting growth.”

The US Dollar Index (DXY) is demonstrating a loss in the downside momentum below 102.40 after a series of downside swings. A power-pack action is anticipated from the USD Index ahead of the monthly US Retail Sales (April) data. As per the estimates, the economic data expanded by 0.7% in April vs. a contraction of 0.6% witnessed in March.

On the Pound Sterling front, shortages of labor and historic high food inflation have been major catalysts of double-digit United Kingdom inflation. The release of the UK Employment (April) data will indicate the strength in the overall labor market.