GBPUSD might be in for a decline, as the pair is forming a head and shoulders pattern on its hourly time frame. Price has yet to test the neckline around the 1.2500 mark to confirm that a selloff is underway.

The 100 SMA already crossed below the 200 SMA to suggest that the path of least resistance is to the downside or that support is more likely to break than to hold. In that case, GBPUSD could fall by the same height as the formation or around 100 pips.

Stochastic appears to be on the move down to reflect bearish pressure, although the oscillator is also moving sideways to signal consolidation. RSI is also treading sideways but has some room to head south, so price could follow suit while bearish pressure remains in play.

GBPUSD could take cues from the UK jobs report tomorrow, as a larger increase in joblessness of 13.9K versus the earlier 10.9K gain is eyed. This should be enough to take the jobless rate higher while the average earnings index is expected to fall from 5.6% to 5.3% to reflect weaker wage growth and inflationary pressures.

Keep in mind that the BOE decision last week was more dovish than expected, so weak labor market data could reinforce this downbeat view. Two MPC members voted to cut rates instead of announcing a unanimous decision to hold rates steady while BOE head Bailey talked of more substantial cuts than expected later on.

Meanwhile, the dollar is awaiting US PPI and CPI data, which are likely to set Fed policy bets in the near-term. Strong inflation figures could mean upside for the currency, as these might dampen easing expectations for June or July. On the other hand, weak data could reinforce views that the Fed is still bound to cut three times this year.