- GBP/USD rises more than 0.20% due to a deteriorating economic outlook in the US.
- US jobless claims exceeding forecasts portray the labor market is easing.
- Federal Reserve officials pushed back against rate cuts next year, with investors pricing 88 bps of Fed cuts.
The Pound Sterling (GBP) clings to its earlier gains versus the US Dollar (USD) on Thursday as the economy in the United States (US) deteriorates further, warranting no additional tightening by the Federal Reserve. In price action terms, the GBP/USD jumped from daily lows of 1.2370 and trades at 1.2447, up 0.26%.
Pound Sterling gains as US data weakens US Dollar, GBP/USD traders eye UK Retail Sales
Investors' sentiment deteriorated after US economic data portrayed that the economy is losing steam faster than expected. US Initial Jobless Claims for the last week rose by 231K more than the 220K expected, revealed the US Department of Labor. Further data revealed by the US Federal Reserve noted that Industrial Production in October contracted, hurt by the auto strike.
In the meantime, Federal Reserve speakers crossed newswires, they’re trying to push back against rate cut expectations, led by Cleveland Fed President Loretta Mester, who said the US central bank is data dependent on whether to raise rates further. Meanwhile, interest rates traders have priced in 88 basis points of rate cuts for 2024.
The GBP/USD rise is also courtesy of the broad weakness of the Greenback. The US Dollar Index (DXY) dropped 0.01%, at 104.38, undermined by the fall in US Treasury bond yields.
Aside from this, the latest UK inflation report revealed that consumer inflation dropped to 4.6%, down from 6.7%, the lowest since October 2021. Even though the Bank of England (BoE) has stressed rates need to be higher for longer, money market futures are not expecting more rate hikes.
Ahead in the calendar, UK Retail Sales are expected to print a recovery after plunging -0.9% in September monthly data. Annually, estimates are at -1.5% contraction, worse than the September data. In the US, housing data, Building Permits, and Fed speakers, are expected to offer fresh impetus to GBP/USD traders.
GBP/USD Price Analysis: Technical outlook
The daily chart portrays the pair as neutral to upward biased, though the GBP/USD failed to remain above the 200-day moving average (DMA) at 1.2440, which could exacerbate a dip below the 1.2400 figure. A breach of the latter would expose the 1.2300 mark, head of testing the 50-DMA at 1.2256, with next support seen at a November 13 low of 1.2209. On the upside, if buyers reclaim the 200-DMA, a test of 1.2500 is on the cards.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD retreats toward 1.0850 on modest USD recovery
EUR/USD stays under modest bearish pressure and trades in negative territory at around 1.0850 after closing modestly lower on Thursday. In the absence of macroeconomic data releases, investors will continue to pay close attention to comments from Federal Reserve officials.
GBP/USD holds above 1.2650 following earlier decline
GBP/USD edges higher after falling to a daily low below 1.2650 in the European session on Friday. The US Dollar holds its ground following the selloff seen after April inflation data and makes it difficult for the pair to extend its rebound. Fed policymakers are scheduled to speak later in the day.
Gold climbs to multi-week highs above $2,400
Gold gathered bullish momentum and touched its highest level in nearly a month above $2,400. Although the benchmark 10-year US yield holds steady at around 4.4%, the cautious market stance supports XAU/USD heading into the weekend.
Chainlink social dominance hits six-month peak as LINK extends gains
-637336005550289133_XtraSmall.jpg)
Chainlink (LINK) social dominance increased sharply on Friday, exceeding levels seen in the past six months, along with the token’s price rally that started on Wednesday.
Week ahead: Flash PMIs, UK and Japan CPIs in focus – RBNZ to hold rates
After cool US CPI, attention shifts to UK and Japanese inflation. Flash PMIs will be watched too amid signs of a rebound in Europe. Fed to stay in the spotlight as plethora of speakers, minutes on tap.