GBPUSD recorded weekly highs in the Asian session on Thursday, propelled by low-impact FOMC minutes. The cable was at 1.2674 at 7.50 am UTC, having risen +0.29%, and traders will likely dream of extended gains ahead of the UK Purchasing Managers Index (PMI) release. Furthermore, the pair will get more impetus when the US releases its Initial Jobless Claims data for the past week.
The FOMC minutes released on Wednesday show that the FOMC meeting in January, while urging caution against rushed cutting of interest rates, also expressed concerns over the impact of high interest rates on the economy.
Furthermore, it is also inferred from the minutes that some FOMC members opined that the current rates could be the peak, at least for this cycle. The dovish-leaning sentiments will likely exert downward pressure on the dollar. Importantly, the forex market expects a decline in the borrowing rate during the second half of the year.
The US dollar could, however, get some support from the US treasury yields, which have stabilized after losses in the last two days. Yields on both the 10-year and 5-year treasuries have returned to the 4.300% mark.
Meanwhile the UK PMI figures for manufacturing and services industries will be out during the London session on Thursday. A rise in the PMI figures will help GBPUSD build from its early gains as the market waits for US jobs data release. Despite concerns over inflation, the US economy created jobs at a faster rate than expected between the beginning of and mid-February. A third successive decline in Initial Jobless Claims figures would help the dollar recover its recent losses.
Technical analysis
GBPUSD has pivoted at 1.2615, with a strong upward momentum as shown by the RSI on the 30-minute chart. The current momentum will likely encounter resistance at 1.2665, but extended control by the bulls could see them test 1.2680. However, a slowdown in the momentum will see the pair head further south of 1.2615. A breach of the psychological support at the 1.2600 mark could create headwinds to push the trading pair to 1.2580.
