GBP/USD remains muted on Tuesday in the Asian session.
Hawkish BOE surprise keeps sterling off the lower levels, UK job data eyed.
A downtick in US Treasury yields keeps US dollar gains in check.

GBP/USD extends the previous day’s sluggish momentum and trades quietly on Tuesday morning. After testing the high of 1.3888 on Friday, the pair continued to remain submissive near 1.3850.

At the time of writing, GBP/USD is trading at 1.3843, up 0.05% for the day.

The sterling has been influenced by a combination of other factors ranging from risk appetite to covid and Brexit headlines, despite the surprise call from the Bank of England (BOE). As per a Reuters poll, BOE will raise borrowing costs by the end of 2022, much before the early expectations and even sooner than the mentioned timeline backed by solid economic recovery and high inflation around the corner.

The gains were limited after the UK Brexit Minster Lord Frost warned the European Commission on the suspension of the Northern Ireland (NI) protocol if they do not take renegotiation proposals seriously.

Meanwhile, traders wait for the UK Unemployment data to gauge the labor market conditions, which could influence the BOE rate hike decision. Apart from that, Claimant Count Change, US Inflation rate also catches market attention.

The US Dollar Index (DXY), which tracks the greenback performance against the basket of currencies, turns mildly lower below 92.60 ahead of the US inflation rate, which is helping GBP/USD find footing in the Asian session.

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