GBPUSD Forecast As the Pound Gets Rejected At 1.7000

Summary:
• The British pound encountered rejection at 1.7000 on Thursday, but the absence of high-impact data could see it take another stab on Friday.

GBPUSD is attempting another go at 1.2700 on Friday, in the absence of high-impact economic data. The currency pair traded at 1.2665 at press time, having edged up +0.05%. The pound’s latest rise is powered by UK Purchasing Managers Index (PMI) figures, which came out stronger than the US equivalent. The cable’s rise could, however, be slowed down by US Treasury yields, which have returned above 4.300%.

UK’s economy has once again showed signs of recovery, after reporting two consecutive quarters of contraction. This had the country’s GDP lose a combined 0.5% of its size in 2023. However, BoE Governor Andrew Bailey, in his testimony to the UK parliament earlier in the week, cast an optimistic view. This was underlined by better-than-expected PMI figures released on Thursday.

The S&P Global/CIPS UK Composite PMI registered at 53.3, beating the previous figure of 52.9. which matched the consensus forecast. Notably, this was underpinned by growth in services PMI, while the manufacturing PMI fell. The former stood at 54.3, beating the forecast 54.2, while the latter came in at 47.1, less than the projected 47.5, but higher than the previous reading of 47.0.

Meanwhile, the US jobs market beat expectations, but lower-than expected PMI figures shaved the dollar’s strength. Initial Jobless Claims fell to 201k from 213k, beating the forecast 217k. However, the S&P Global Composite PMI fell to 51.4 in February from February’s 52.0. Similarly, February Services PMI fell from 52.5 to 51.3. The PMI figures have weighed down on the dollar, as they are interpreted as portraying a better picture of the US economy than the jobs figures.

Technical analysis

The GBPUSD pivot is at 1.2670, and the pair will need to break above this level to sustain upside action. However, if it breaks below that mark, the sellers will likely target 1.2635. Extended control by the sellers could see the support move lower to 1.2610. Alternatively, if GBPUSD breaks the 1.2670 resistance, it could build momentum to 1.2690, beyond which it could test 1.2710.