The GBP/USD pair extended its losses for a third consecutive session on Friday, trading around 1.2580 during Asian market hours. The decline was driven by a stronger US Dollar as market participants continued to assess the Federal Reserve’s monetary policy stance following an unexpected drop in US Initial Jobless Claims.
The US Dollar Index (DXY), which measures the greenback against a basket of major currencies, hovered near 107.00, slightly below its recent yearly peak of 107.15 reached on Thursday. The dollar gained strength after the release of last week’s US Initial Jobless Claims data.
For the week ending November 15, US Jobless Claims decreased to 213,000 from a revised figure of 219,000 (previously reported at 217,000) in the preceding week, falling short of the 220,000 forecast. This unexpected decline has led to speculation that the Federal Reserve may adopt a more gradual approach to cutting interest rates.
Data from the CME FedWatch Tool indicates that futures traders currently see a 57.8% probability of the Federal Reserve implementing a quarter-point rate cut, a decrease from the 72.2% chance observed last week.
Meanwhile, the GfK Consumer Confidence Index in the United Kingdom showed a 3-point increase in November, rising to -18 from the previous -21, marking its first improvement in three months. This uptick is attributed to lower interest rates, higher wages, and reduced anxiety about potential tax hikes.
Looking ahead to Friday, traders will be closely watching the release of the S&P Global Purchasing Managers’ Index (PMI) data for both the US and the UK. Additionally, the UK’s October Retail Sales figures and the final Michigan Consumer Sentiment report will be key data points under scrutiny.
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