The pound sterling added to its losses against the US dollar on Friday, with the GBPUSD pair heading down 0.21% to trade at 1.2616 in the Asian session. The pound is under pressure following Thursday’s PMI readings which came in lower-than-expected. However, GBPUSD’s downside has been slowed down by the dollar’s own weak fundamentals emanating from weak unemployment figures.
Thursday saw both the UK and US economies report weak macroeconomic data. The S&P Global/CIPS UK Composite PMI for March declined to 52.8 from February’s 53.0, missing the forecast 52.9. Similarly, the S&P Global/CIPS UK Services PMI missed the forecast estimate, coming at 53.1 versus 53.4.
Across the Atlantic, the US Initial Jobless Claims figures stood at 221,000, exceeding the forecast 213,000. Meanwhile, the previous reading was revised upwards by 2,000 to 212,00, adding drag to the dollar. Furthermore, the US balance of trade worsened in March, with the deficit rising from $-67.6 billion in February to -$68.9 billion, exceeding the forecast by -2.0 billion.
Despite both the UK and US reporting underwhelming data. The dollar still has the upper hand in the intra-day trading on Friday. Yields on benchmark 10-year and 5-year US Treasury bonds stay above 4.300% as of this writing, providing tailwinds to the dollar. In addition, rising tensions in the Middle East favour the greenback, thanks to its safe haven status. Israel has said that it has received intelligence that Iran plans to attack it within the next 48 hours and has warned that it will retaliate with force.
Technical analysis
The sellers are in control of the GBPUSD market, as shown by the RSI indicator. The downside will prevail as long as resistance remains at the 1.2632 pivot mark. That could trigger a move below the 1.2600 psychological support in extension, beyond which the pair could test 1.2581. However, if the buyers manage to keep the price above 1.2632, they could build the momentum to go past the next resistance at 1.2653, and potentially test 1.2675 in extension.
