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GBP/USD hits 12-week high amid positive data

  • GBP/USD climbs above 1.2600, driven by optimistic UK data and a jump in UK yields.
  • US data was mixed with solid Services and Composite PMIs, but Manufacturing PMI fell into contraction.
  • Upcoming speeches by the BoE Governor and US economic reports to provide further cues for GBP/USD movement.

The Pound Sterling (GBP) advances to a new 12-week high against the US Dollar (USD) courtesy of better-than-expected data revealed on Thursday, which sparked a sell-off of Gilts; consequently, UK bond yields rose. The GBP/USD is trading at 1.2606 after hitting a high of 1.2615.

GBP/USD reaches new heights, bolstered by UK bond yield rise and mixed US business activity indicators

S&P Global revealed that business activity in the United States (US) remains solid after the Services and Composite PMIs exceeded forecasts. Nevertheless, the Manufacturing PMI slipped below the 50 expansion/contraction threshold, painting a mixed scenario for the economy. In the next week, the Institute for Supply Management (ISM) will update the readings for December.

Aside from this, in the UK, Consumer Confidence improved, while S&P Global/CIPS figures show business outlook is improving, even though manufacturing activity stood at recessionary territory for the sixth consecutive month.

Recently, the Bank of England (BoE) Chief Economist Huw Pill insisted the central banks would continue to fight inflation despite the stagnating outlook for the British economy. Although some lawmakers had stressed the need for lower rates, Pill stated that it was too early to consider such a move.

Even though inflation eased from 6.7% to 4.6% in October, inflation remains twice the BoE’s goal of 2%.

The Autumn Statement revealed by the UK Chancellor of the Exchequer, Jeremy Hunt, was well received by investors. Nevertheless, estimates for growth and inflation were pessimistic at a time when market participants estimated the UK economy to dip into a recession.

Next week, the UK economic docket will feature a speech by the BoE Governor Andrew Bailey. On the US front, the calendar will feature Consumer Confidence, Fed speakers, a preliminary reading for GDP, inflation data and the ISM Manufacturing PMI.

GBP/USD Price Analysis: Technical outlook

The GBP/USD daily chart portrays the pair in a bullish run that could extend toward the psychological 1.2700 figure. A breach of that level could expose the August 30 swing high at 1.2746, followed by the August 22 high at 1.2800. On the other hand, if the pair slides below 1.2600, the November 23 high at 1.2569 would emerge as first support, followed by today’s low of 1.2524.

GBP/USD

Overview
Today last price1.2602
Today Daily Change0.0068
Today Daily Change %0.54
Today daily open1.2534
 
Trends
Daily SMA201.2334
Daily SMA501.226
Daily SMA1001.2501
Daily SMA2001.2453
 
Levels
Previous Daily High1.2576
Previous Daily Low1.2489
Previous Weekly High1.2506
Previous Weekly Low1.2213
Previous Monthly High1.2337
Previous Monthly Low1.2037
Daily Fibonacci 38.2%1.2543
Daily Fibonacci 61.8%1.2522
Daily Pivot Point S11.249
Daily Pivot Point S21.2446
Daily Pivot Point S31.2403
Daily Pivot Point R11.2577
Daily Pivot Point R21.262
Daily Pivot Point R31.2664

Author

Christian Borjon Valencia

Markets analyst, news editor, and trading instructor with over 14 years of experience across FX, commodities, US equity indices, and global macro markets.

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