- GBP/USD trades in a tight channel above 1.2600 on Thursday.
- The pair could struggle to extend its recovery unless risk mood improves.
- The US economic docket will feature weekly Initial Jobless Claims.
GBP/USD went into a consolidation phase above 1.2600 after closing the previous two trading days in positive territory. The near-term technical outlook suggests that the pair is having a difficult time gathering bullish momentum.
Pound Sterling price this week
The table below shows the percentage change of Pound Sterling (GBP) against listed major currencies this week. Pound Sterling was the strongest against the Swiss Franc.
| USD | EUR | GBP | CAD | AUD | JPY | NZD | CHF | |
| USD | 0.00% | -0.03% | -0.10% | -0.25% | 0.16% | -0.78% | 0.72% | |
| EUR | 0.00% | -0.02% | -0.11% | -0.23% | 0.17% | -0.76% | 0.71% | |
| GBP | 0.02% | 0.02% | -0.09% | -0.20% | 0.19% | -0.74% | 0.73% | |
| CAD | 0.10% | 0.10% | 0.07% | -0.16% | 0.25% | -0.68% | 0.81% | |
| AUD | 0.25% | 0.23% | 0.20% | 0.12% | 0.39% | -0.53% | 0.96% | |
| JPY | -0.16% | -0.17% | -0.21% | -0.25% | -0.41% | -0.94% | 0.56% | |
| NZD | 0.76% | 0.76% | 0.74% | 0.65% | 0.53% | 0.92% | 1.45% | |
| CHF | -0.72% | -0.71% | -0.74% | -0.82% | -0.94% | -0.54% | -1.48% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent EUR (base)/JPY (quote).
The positive shift seen in risk mood on Wednesday, as reflected by the bullish opening in Wall Street, caused the US Dollar (USD) to weaken against its rivals. Later in the American session, however, the USD managed to find a foothold as the benchmark 10-year US Treasury bond yield edged higher. Minneapolis Federal Reserve President Neel Kashkari told CNBC that two to three rates cuts would be appropriate this year.
Later in the day, the US Department of Labor will publish the weekly Initial Jobless Claims data. The number of first-time applications for unemployment benefits is forecast to come in at 220,000.
The impressive January jobs report highlighted a strong labor market and caused investors to refrain from pricing in a rate cut in March. Although the weekly Jobless Claims report is not significant enough to influence these expectations, a reading above 230,000 could cause the USD to edge lower with the immediate reaction.
Meanwhile, market participants will continue to keep a close eye on risk perception. US stock index futures trade flat in the European session. In case major equity indices in the US correct lower following Wednesday’s rally, the USD could stay resilient against its rivals and weigh on GBP/USD.
GBP/USD Technical Analysis
The Relative Strength Index (RSI) indicator on the 4-hour chart turned flat after recovering to 50, reflecting a lack of bullish momentum. On the upside, 1.2650 (Fibonacci 23.6% retracement of the latest uptrend) aligns as immediate resistance before 1.2680 (20-day Simple Moving Average (SMA), 50-day SMA) and 1.2700 (psychological level, 200-period SMA on the 4-hour chart).
Supports could be seen at 1.2600 (static level, psychological level), 1.2560 (200-day SMA) and 1.2540 (Fibonacci 38.2% retracement).