GBP/USD hits a new YTD high above 1.2500 on upbeat sentiment, weak US jobs data

The Pound Sterling (GBP) climbs above 1.2500 and hits a new YTD high at 1.2525, on risk on impulse in the FX space and overall US Dollar (USD) weakness. Economic data released in the United States (US) flashes the economy is slowing down, a headwind for the greenback. At the time of writing, the GBP/USD is trading at 1.2499, above its opening price by 0.72%.

GBP/USD stays positive, despite sentiment shifting sour

Wall Street reversed its course and turned red. The US JOLTs reports, sought by the US Federal Reserve (Fed) as they monitor labor market data, dropped to their lowest level in two years. Figures showed a decrease of 32K to 9.9 million job openings on the last day of February, its lowest since May 2021. Meanwhile, Factory Orders in the US fell for two consecutive months, printing a 0.7% MoM plunge, worst than an estimated contraction of 0.5%, according to the US Commerce Department.

On the data release, the GBP/USD increased from around 1.2465 to its new YTD high at 1.2525. The Fed has constantly reiterated the tightness of the labor market, and a decrease in job vacancies, could help inflation to continue its downward trajectory. Despite OPEC’s latest crude oil production cut, that could make Fed’s job easier.

On Wednesday, the ADP Employment Change report, followed by jobless claims on Thursday, and the US Nonfarm Payrolls data, would update the effect of higher rates on the labor market.

On the UK front, Bank of England (BoE) speakers had been crossing the wires. Of late, the BoE Chief Economist Huw Pill commented that his May rate decision would be focused on “data flow and its interpretation in the forecast.” Earlier, Sylvana Tenreyro, a BoE Monetary Policy Committee (MPC) member, said that a “looser stance is needed to meet the inflation target.”

GBP/USD Technical analysis

From a daily chart perspective, the GBP/USD turned bullish after cracking the February 14 daily high of 1.2270. Additionally, oscillators like the Relative Strength Index (RSI) and the Rate of Change (RoC) justified the case for higher prices. RSI is still in bullish territory, with space before turning overbought. For a bullish continuation, the GBP/USD must achieve a daily close above 1.2500 to test the newly hit YTD high at 1.2525. A breach of the latter will expose the June 7 high at 1.2599, with upside risks at May 27 daily high at 1.2667. Otherwise, a daily close below 1.2500 could pave the way for a pullback. The first demand area would be 1.2400, followed by the 20-day EMA at 1.2274.