- GBP/USD struggles to gain traction following the latest UK data releases.
- The UK economy fell into recession in the fourth quarter.
- Weekly Initial Jobless Claims and January Retail Sales data from the US will be watched closely.
Following a quiet Asian session on Thursday, GBP/USD came under modest bearish pressure and retreated to the 1.2550 area in the European morning. The pair’s near-term technical outlook suggests that the bearish bias remains intact.
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 weakest against the US Dollar.
| USD | EUR | GBP | CAD | AUD | JPY | NZD | CHF | |
| USD | 0.59% | 0.69% | 0.54% | 0.44% | 0.58% | 0.98% | 1.08% | |
| EUR | -0.60% | 0.08% | -0.07% | -0.17% | -0.03% | 0.39% | 0.48% | |
| GBP | -0.70% | -0.09% | -0.16% | -0.23% | -0.11% | 0.31% | 0.38% | |
| CAD | -0.53% | 0.05% | 0.14% | -0.10% | 0.04% | 0.44% | 0.54% | |
| AUD | -0.44% | 0.15% | 0.24% | 0.08% | 0.13% | 0.54% | 0.61% | |
| JPY | -0.59% | 0.00% | 0.13% | -0.05% | -0.15% | 0.39% | 0.49% | |
| NZD | -0.99% | -0.39% | -0.31% | -0.47% | -0.55% | -0.41% | 0.07% | |
| CHF | -1.09% | -0.47% | -0.40% | -0.54% | -0.64% | -0.48% | -0.10% |
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 UK’s Office for National Statistics (ONS) reported that the Gross Domestic Product (GDP) contracted by 0.3% on a quarterly basis in the fourth quarter. With this reading following the 0.1% contraction recorded in the third quarter, the UK economy officially slipped into a technical recession.
Other data from the UK revealed that Industrial Production and Manufacturing Production expanded by 0.6% and 0.8%, respectively, on a monthly basis in December.
In the second half of the day, the US Department of Labor will release the weekly Initial Jobless Claims data, which is forecast to edge higher to 220,000 in the week ending February 10. A bigger-than-forecast increase in the number of first-time applications for unemployment benefits could weigh on the US Dollar and help GBP/USD limit its losses. On the other hand, a reading close to 200,000 could reaffirm tight conditions in the labor market and support the USD.
The US economic docket will also feature the January Retail Sales report. Since this data is not adjusted for price changes, it is unlikely to trigger a noticeable reaction unless it diverges significantly from the market expectation of -0.1%.
In the meantime, US stock index futures trade modestly higher on the day. In case risk mood continues to improve after Wall Street’s opening bell, the USD could struggle to attract investors.
GBP/USD Technical Analysis
The Relative Strength Index (RSI) indicator on the 4-hour chart stays near 40, reflecting the bearish bias. On the downside, 1.2540 (Fibonacci 38.2% retracement of the latest uptrend) aligns as immediate support ahead of 1.2520 (static level) and 1.2500 (psychological level, static level). If 1.2500 support fails, 1.2450 (Fibonacci 50% retracement) could be seen as the next bearish target.
First resistance is located at 1.2600 (former support, 50-period Simple Moving Average (SMA), 20-period SMA) could be seen as first resistance before 1.2650 (Fibonacci 23.6% retracement, 100-period SMA) and 1.2680 (200-period SMA).