GBPUSD Extends Gains As Hunt Statement, US Jobs Data Provide Tailwinds

Summary:
• UK's Chancellor for Exchequer Jeremy Hunt provided optimism around the UK economy, boosting GBPUSD as US jobs data disappointed.

GBPUSD opened the European session on a positive on Thursday, as the pound got tailwinds from Exchequer Chancellor Jeremy Hunt’s budget statement. The cable traded at 1.2735, up by 0.02%, and its trajectory will now depend on data coming out of the United States, in the absence of high-impact data from the UK.

Hunt stated in parliament on Wednesday that the UK economy has overcome the post-Covid financial and energy crises and is now on a growth path. Specifically, the growth projection for 2024 has been revised upwards to 0.8% from 0.7%.  Furthermore, the 2025 forecast has been raised from 1.4% to 1.9%. This positive outlook helped lift the pound in the midst of unfavourable dollar fundamentals. In addition, the Chancellor emphasized the focus on bringing down inflation, stating that there was no hurry to cut interest rates.

On the opposite side, Federal Reserve Chairman Jerome Powell confirmed what many analysts expected. He adopted a cautious tone, stating that the Fed would likely bring down interest rates this year, but emphasizing that the overriding determinant is the 2% inflation target. However, his statement failed to rally the dollar, and traders will be looking for new cues during his second day of testimony on Thursday.

The dollar also ran into headwinds from ADP Nonfarm Employment data, which came in at 140,000, missing the forecast 149,000. However, the greenback got some support from the January JOLTs Jobs Openings data, which printed at 8.863 million, beating the 8.800 million forecast figure. The GBPUSD currency pair’s movement on Thursday will depend to a great extent on Powell’s statement and the Initial Jobless Claims data.

Technical analysis

 GBPUSD has a pivot at 1.2705, with the buyers in control. The pair will encounter resistance at 1.2760, but an extended bullish control could breach it. That will build momentum to test the 1.2780 resistance. However, if the pair goes under 1.2705, it will shift control to the sellers, with support at 1.2690. Extended control by the bears could break the first support, and shift the next support to 1.2670.