GBP/USD Forecast: Pound Sterling needs to clear 1.2670 to attract buyers

• GBP/USD rose toward 1.2650 in the European session on Tuesday.
• The pair could face stiff resistance at 1.2670.
• US January inflation data will be watched closely by market participants.

GBP/USD gained traction and touched its highest level in more than 10 days above 1.2650 in the European session on Tuesday. Although the pair’s near-term technical outlook points to a bullish tilt, buyers could refrain from betting on a steady advance unless 1.2670 resistance is cleared.

The UK’s Office for National Statistics reported early Tuesday that the ILO Unemployment Rate declined to 3.8% in the three months to December from 4.2%. This reading came in below analysts’ estimate of 4%. Other details of the report showed that wage inflation, as measured by the change in the Average Earnings Excluding Bonus, softened to 6.7% from 6.2%. Although both of these prints could be welcoming news for the Bank of England (BoE), wage inflation is arguably still strong enough for policymakers to avoid cutting rates prematurely.