The British pound is in the red against the US dollar in the early London trading session, as the market reacts to Thursday’s release of UK preliminary GDP figures and some positive US jobs data. GDPUSD was trading at 1.2580 at 8.44 am GMT, having shed -0.14% off the day’s opening. The British economy contracted by -0.2% in the last quarter of 2023, missing the forecasted -0.1%.
US Core Retail Sales fell in January, shrinking by -0.6%, against a projected growth of +0.2%. Similarly, last week’s Continuing Jobless Claims fell short of expectations, rising to 1,885k, against a projected decline to 1,880k. However, there were positives for the US dollar from the Initial Jobless Claims, which declined to 212k, against the projected 221k. Also, the Philadelphia Fed Manufacturing Index rose to -2.40, topping the projected -13.70.
Meanwhile, GBP got some support from positive economic data early on Friday. The UK economy experienced increased consumer spending in January, as Core Retail Sales (excluding auto sales and fuel) rose by 3.2%, exceeding the projected 1.7%. Nonetheless, traders seem to be paying greater attention to the UK’s second successive GDP contraction, which means the country is in a technical recession.
GBPUSD is likely to continue trading within narrow margins, as the market awaits the release of US Producer Price Index (PPI) reading for January. The index is used as a gauge for inflation, and a rise beyond the projected +0.1% will be taken as bullish for the dollar and vice versa.
Technical analysis
The RSI for GBPUSD on the 30-minute chart favours upward movement by the pair. The pivot price will likely be at 1.2570, at which point the bulls will meet the first resistance at 1.2605. A break beyond that level will underline bullish control, which could potentially see attempts at 1.2620. Alternatively, action below 1.2570 will find the first support at 1.2555. A break below that point will invalidate the bullish view, and could propel the sellers to push the second support to 1.2540.
GBPUSD on a 30-minute chart