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GBP/USD gains ground as the US Dollar moves in the negative territory.
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Low-impact upbeat UK data might have reinforced the strength of the British Pound.
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Upbeat US labor data limited the losses of the Greenback.
GBP/USD continued its winning streak for a third straight day, trading above around 1.2690 in the Asian session on Friday. The pound sterling is likely to have gained ground following improved data from the United Kingdom (UK) on Thursday. However, upbeat data from the United States (US) could contribute to the advance capping of the GBP/USD pair.
UK Consumer Credit showed that loans to individuals rose to £2.005B in November from £1.411B previously (revised from £1.289B). Additionally, the S&P Global/CIPS Composite PMI for December rose to 52.1 from 51.7 previously. At the same time, services PMI rose to 53.4 from 52.7 previously.
The British Pound (GBP) may face selling pressure as a result of the pessimistic economic outlook. UK corporate executives urged the Bank of England (BoE) to cut interest rates quickly to provide much-needed support to the struggling economy. The Institute of Directors’ Economic Confidence Index survey further underscored the ongoing decline in optimism among British directors about the country’s economic prospects over the next 12 months.
The US Dollar Index (DXY) remains calm after posting recent losses, trading near 102.40. A pullback in United States (US) Treasury yields could put pressure on the US dollar (USD). As of press time, the 2-year and 10-year yields on US bond coupons were lower at 4.37% and 3.99%, respectively.
However, the US dollar found support on Thursday’s encouraging employment data. In December, US ADP employment changes saw a significant increase, adding 164K new positions, beating the previous figure of 101K and market expectations of 115K.
Initial jobless claims for the week ended December 29 showed positive signs, falling to 202K from 220K previously, beating expectations of 216K. Additionally, the S&P Global Composite PMI reported a slight decline in business activity, with a reading of 50.9 compared to the market consensus of a steady 51.0.
Anticipation is building among traders as they await more data from the US employment market, including key indicators such as average hourly earnings and nonfarm payrolls (NFP) for December. In addition, the ISM Services PMI is set to provide insight into the current state of the US services sector.
GBP/USD: ADDITIONAL IMPORTANT LEVELS
