GBP/USD returns above 1.3400 as the US Dollar rally loses steam
The Pound is trimming losses against the US Dollar on Friday, with price action returning above 1.3400 ahead of the US session opening, up from Thursday's lows near 1.3360. The pair is on track to end the week practically unchanged after depreciating about 0.7% in the previous two weeks.
The US Dollar drew support from the unexpected decline in US Initial Jobless Claims on Thursday, which dropped in the week of January 10 to their lowest levels since November. Beyond that, the New York Empire State and Philadelphia Fed Manufacturing reports highlighted a solid improvement in business conditions in their respective regions, boosting confidence in a solid US economic recovery.
These figures cemented expectations that the Federal Reserve (Fed) will keep its monetary policy unchanged, which were reinforced by the hawkish rhetoric of Atlanta Federal Reserve (Fed) President Raphael Bostic and Kansas City Federal Reserve President Jeffrey Schmid later on Thursday.
In the UK, November’s Gross Domestic Product beat expectations with a 0.3% growt, to offset October’s 0.1% contraction, boosted by a strong performance of the manufacturing and services sectors. The data eased market concerns about the economic impact of the Labour Cabinet’s Budget and provided some support to the GBP.
On Friday, the focus will be on US Industrial Production, which is expected to have slowed in December, and on comments from Fed vice chairs Michelle Bowman and Philip Jefferson.
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