On Wednesday, the British pound (GBP) dipped by 0.10% against the US dollar (USD), a reaction to less-than-ideal economic indicators from the United Kingdom (UK) as well as positive employment figures from the United States. As of this moment, GBP/USD is trading at 1.3486 after previously rising to a daily peak of 1.3516.
Positive US services data and increasing volatility bolster the dollar; the pound remains stable, placing pressure on cable
The CBOE Volatility Index (VIX) indicates that traders are seeking protection against potential downturns in U.S. stocks, with the VIX climbing nearly 2%, reflecting a somewhat cautious market atmosphere.
In December, the ISM Services PMI saw a notable increase, suggesting growth in the service sector. The index rose from 52.6 to 54.4, surpassing expectations of 52.3. Notably, the employment subcomponent also improved from 48.9 to 52, while prices paid decreased from 65.4 to 64.3.
Concurrently, the Department of Labor published the November JOLTS job report, revealing a drop in job openings from 7.449 million in October to 7.146 million.
Earlier reports showed that the economy added 41,000 jobs in December according to the ADP employment change data. While this figure was below the anticipated 47,000, it was an escalation from November, which showed a drop of 29,000 jobs.
Following these releases, the US dollar recovered from earlier losses, applying pressure on the pound. The US dollar index (DXY), which measures the dollar’s strength against six other currencies, increased by 0.06% to 98.65.
Meanwhile, cable remains under pressure as investors exhibit risk-averse behavior, due in part to its positive correlation with global stock markets. Focus will remain on economic developments and political issues in the U.S., especially given the scant economic data emerging from the UK.
Looking ahead, new unemployment claims in the U.S. for the week ending January 3 are expected to rise from 199,000 to 210,000. Additionally, Friday’s non-farm payrolls report for December will be closely watched, with economists estimating the creation of 60,000 jobs, down from 64,000 previously.
GBP/USD Price Analysis: Technical Outlook
The GBP/USD pair seems likely to produce a series of bearish daily candlesticks that suggest a stronger USD, although it is yet to fully reverse its bearish sentiment. The Relative Strength Index (RSI) currently favors buyers, yet it has dipped below recent lows toward a neutral stance.
If GBP/USD falls below 1.3400, it will face a test at the 200-day SMA located at 1.3379. Should this occur, bears may attempt to push the rate toward the intermediate support level at 1.3179, the low from December 2nd. On the flip side, if it closes above 1.35, buyers might remain optimistic about targeting the 1.36 mark.
The story was updated to reflect that the previous ADP employment change figure was -29,000 instead of -32,000.
This week’s British pound price
The table below displays the percentage change in the British Pound (GBP) against major currencies this week. The pound notably performed strongly against the Swiss franc.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.31% | -0.17% | -0.13% | 0.50% | -0.77% | -0.35% | 0.53% | |
| EUR | -0.31% | -0.48% | -0.38% | 0.19% | -1.08% | -0.65% | 0.22% | |
| GBP | 0.17% | 0.48% | -0.04% | 0.68% | -0.60% | -0.17% | 0.71% | |
| JPY | 0.13% | 0.38% | 0.04% | 0.62% | -0.66% | -0.23% | 0.70% | |
| CAD | -0.50% | -0.19% | -0.68% | -0.62% | -1.11% | -0.84% | 0.04% | |
| AUD | 0.77% | 1.08% | 0.60% | 0.66% | 1.11% | 0.43% | 1.33% | |
| NZD | 0.35% | 0.65% | 0.17% | 0.23% | 0.84% | -0.43% | 0.88% | |
| CHF | -0.53% | -0.22% | -0.71% | -0.70% | -0.04% | -1.33% | -0.88% |
This table indicates the percentage change between major currencies, with the base currency listed in the left column and the quote currency across the top. For instance, if you pick British Pounds from the left and follow along to US Dollars, the percentage change shown in the box reflects the relationship between GBP (Base) and USD (Quote).
