GBP/USD climbs above 1.34 as Fed cut and soft data weigh on US Dollar
- GBP/USD extends gains as weak US jobless data amplifies expectations for deeper Federal Reserve easing next year.
- Traders shift focus to upcoming UK GDP and next week’s BoE rate decision, where a 25 bps cut is heavily priced in.
- Technical outlook turns bullish, with GBP/USD eyeing 1.3450 once a sustained daily close above 1.3400 is achieved.
The Pound Sterling (GBP) rallies during the North American session on Thursday, up over 0.68% after the Federal Reserve (Fed) delivered a 25-basis-point rate cut and a softer-than-expected jobs report, which weighed on the US Dollar (USD). At the time of writing, GBP/USD trades at 1.3417, its highest level in the last six weeks.
Pound rallies after the Fed delivers a widely expected rate cut, soft US labor data deepens bets on further easing
US Initial Jobless Claims for the week ending December 6 increased by 236K, up from the previous week's upwardly revised figure of 192K, reported the Department of Labor. Continuing Claims for the week ending November 29 dipped from 1.937 million to 1.838 million.
The data highlights the ongoing weakness of the labor market. Now, eyes are set on next week’s Nonfarm Payrolls report. Other data showed an unexpected shrink in the US Goods and Services Trade Balance from $-59.3 billion in August to $-52.8 billion in September.
In the meantime, the Federal Reserve rate cut weakened the US Dollar, which, according to the US Dollar Index, is testing levels last seen in mid-October, down 0.40% at 97.73. This despite the fact that the dot plots showed that the median wanted the Fed funds rate to end 2025 within the 3.75%-4% range.
In the UK, the docket has remained light except for Friday’s release of Gross Domestic Product (GDP) figures, which are expected to show an increase of 0.1% MoM in October, above September’s 0.1% contraction.
GBP/USD traders are eyeing next week’s Bank of England (BoE) monetary policy decision. A Reuters survey revealed that economists expect a rate cut of 25 basis points on December 18, which would leave the Bank Rate at 3.75%.
On Friday, the Fed parade begins, with speeches by Paulson, Hammack and Goolsbee.
GBP/USD Price Forecast: Technical outlook
The GBP/USD trend has shifted from neutral to neutral-upwards, with buyers regaining control, but they must achieve a daily close above 1.3400. This will expose the 1.3450 area, followed by the October 17 peak ahead of 1.3500. On the flip side, the first support is 1.3400, followed by the 100-day SMA at 1.3358.
(This story was corrected on December 11 at 16:31 GMT to say that the US Goods and Services Trade Balance print in August was $-59.3 billion, not $-59.8 billion.)
Pound Sterling Price This week
The table below shows the percentage change of British Pound (GBP) against listed major currencies this week. British Pound was the strongest against the US Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.85% | -0.67% | -0.08% | -0.46% | -0.44% | -0.83% | -1.14% | |
| EUR | 0.85% | 0.20% | 0.82% | 0.43% | 0.50% | 0.08% | -0.25% | |
| GBP | 0.67% | -0.20% | 0.62% | 0.22% | 0.28% | -0.14% | -0.46% | |
| JPY | 0.08% | -0.82% | -0.62% | -0.39% | -0.34% | -0.73% | -1.04% | |
| CAD | 0.46% | -0.43% | -0.22% | 0.39% | 0.05% | -0.38% | -0.67% | |
| AUD | 0.44% | -0.50% | -0.28% | 0.34% | -0.05% | -0.40% | -0.71% | |
| NZD | 0.83% | -0.08% | 0.14% | 0.73% | 0.38% | 0.40% | -0.31% | |
| CHF | 1.14% | 0.25% | 0.46% | 1.04% | 0.67% | 0.71% | 0.31% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the British Pound from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent GBP (base)/USD (quote).
Author
Christian Borjon Valencia
FXStreet
Christian Borjon began his career as a retail trader in 2010, mainly focused on technical analysis and strategies around it. He started as a swing trader, as he used to work in another industry unrelated to the financial markets.
