The British pound advanced sharply against the U.S. dollar in early Thursday trading, with GBP/USD edging toward 1.3400, supported by a broad sell-off in the greenback. The currency pair broke its two-day losing streak following renewed uncertainty surrounding U.S.-China trade relations.
After touching a session low near 1.3250 earlier in the week, the pair is now trading near 1.3300, bolstered by weakening sentiment around the U.S. dollar. Market focus has shifted to U.S. economic indicators, including the upcoming Initial Jobless Claims report, which could dictate short-term direction.
The Relative Strength Index (RSI) on the 4-hour chart remains slightly below 50, and GBP/USD is hovering near the 50-period Simple Moving Average, indicating near-term indecision.
UK Data Disappoints But Pound Holds
Despite bearish UK economic data, the pound remained resilient. The latest UK Services and Manufacturing PMIs reflected a contraction in private sector activity for April, initially dragging the pound lower.
However, the downturn was short-lived, as attention quickly turned to global trade dynamics. Comments from U.S. officials, including Treasury Secretary Scott Bessent, hinted at potential tariff reductions with China. These remarks initially boosted USD demand.
But optimism faded when China’s Commerce Ministry denied ongoing trade talks, labeling recent reports as “groundless.” The sharp reversal in sentiment weakened the U.S. dollar, allowing GBP/USD to regain lost ground.
Key Levels to Watch:
- Support:
- 1.3250 – Fibonacci 23.6% retracement
- 1.3200 – Static support
- 1.3150 – Fibonacci 38.2% retracement
- Resistance:
- 1.3300 – Static resistance
- 1.3335 – 20-period SMA
- 1.3400 – Psychological level
U.S. Jobless Data in Focus Next
Markets now await the weekly U.S. Initial Jobless Claims, which will offer fresh insight into the labor market. Analysts expect claims to rise to 221,000, up from 215,000.
A stronger-than-expected reading below 200,000 could renew USD strength and cap GBP/USD’s gains. Conversely, a print above 230,000 may reinforce the current rebound in the pound.
This data point could prove pivotal for short-term traders, especially as technical indicators suggest consolidation before a breakout.
Bottom Line:
GBP/USD is benefiting from shifting global trade narratives and a weaker dollar, but with mixed technicals and key U.S. data ahead, caution remains essential.
