GBP/USD rises toward 1.2700 ahead of US Nonfarm Payrolls
- GBP/USD gains ground as the US Dollar moves in the negative territory.
- Low-impact upbeat UK data might have reinforced the strength of the British Pound.
- Upbeat US labor data limited the losses of the Greenback.
GBP/USD continues its winning streak for the third successive day, trading higher around 1.2690 during the Asian session on Friday. The Pound Sterling gained ground possibly on the improved data released on Thursday from the United Kingdom (UK). However, the upbeat data from the United States (US) might have contributed to capping the advance of the GBP/USD pair.
UK Consumer Credit showed that individuals’ borrowing rose to £2.005B in November from the previous £1.411B (Revised from £1.289B). Additionally, S&P Global/CIPS Composite PMI for December improved to 52.1 from 51.7 prior. At the same time, Services PMI increased to 53.4 from 52.7 prior.
The British Pound (GBP) may encounter selling pressure as a result of the pessimistic economic outlook. Corporate executives in the UK have urged the Bank of England (BoE) to swiftly lower interest rates to offer much-needed support to the struggling economy. The Institute of Directors Economic Confidence Index survey further underscores the ongoing decline in optimism among British directors regarding the country's economic prospects in the coming 12 months.
The US Dollar Index (DXY) remains calm after posting recent losses, trading around 102.40. The pullback in United States (US) Treasury yields could exert pressure on the US Dollar (USD). By the press time, the 2-year and 10-year yields on US bond coupons stand lower at 4.37% and 3.99%, respectively.
However, the US Dollar received support from encouraging employment data revealed on Thursday. In December, the US ADP Employment Change saw a significant surge, adding 164K new positions, surpassing the previous figure of 101K and the market expectation of 115K.
Initial Jobless Claims for the week ending on December 29 displayed positive signs, decreasing to 202K from the previous 220K, surpassing the anticipated 216K. Additionally, the S&P Global Composite PMI reported a slight decline in business activities, with a reading of 50.9 compared to the market consensus of a steady 51.0.
The anticipation is building among traders as they await further data from the US employment market, including crucial indicators such as Average Hourly Earnings and Nonfarm Payrolls (NFP) for December. In addition to that, the ISM Services PMI is set to provide insights into the current conditions within the US service sector.