GBP/USD marches towards 1.1700 on weaker DXY, focus is on US NFP

• GBP/USD is advancing towards 1.1700 as the DXY has extended losses.
• DXY’s investors have turned cautious on lower consensus for US NFP.
• Weaker US Average Hourly Earnings may create more problems for the Fed.

The GBP/USD pair is advancing gradually towards the round-level resistance of 1.1700 as the US dollar index (DXY) has surrendered Tuesday’s gains. The cable has extended its recovery after overstepping the immediate resistance of 1.1675 and has reached near 1.1685 while drafting the article. The asset is expected to extend its gains further as the DXY is expected to remain volatile further.

The DXY has given a downside break of the consolidation formed in a narrow range of 108.67-108.88 in the Asian session. As investors are turning cautious ahead of the US Nonfarm Payrolls (NFP) data, DXY’s strength is fading away. The preliminary forecast indicates that the US economy has created additional 300k jobs in August, lower than the prior release of 528k.

As the US economy is operating at full employment levels, 300k job additions seem satisfactory. However, the Average Hourly Earnings data may make the job laborious for the Federal Reserve (Fed) policymakers. Price pressures have already dented the sentiment of households, therefore higher paychecks are required to offset inflated payouts. And, the economic data is expected to improve marginally by 10 basis points (bps) to 5.3%.

On the UK front, a light economy calendar may shift more responsibility on the DXY for direction in the cable. Next week, investors will focus on Like-For-Like Retail Sales by the British Retail Consortium (BRC). Earlier, the economic data landed at 1.6% on an annual basis. The economic data is expected to remain higher as energy bills are soaring in the pound zone.