The GBP/USD currency pair is showing slight gains, trading above the 1.2500 level during the European morning session. This follows a period of weakness where the pair faced pressure from a robust US dollar, particularly at the beginning of the week. Market sentiment has shifted towards a more optimistic tone, and as traders test the support level at 1.2500, sellers appear to be holding back.
The recent strength of the US dollar has been influenced by safe-haven flows, which were prevalent towards the end of the previous year. As we enter European trading hours on Thursday, US stock index futures are indicating a positive trend, reflecting growing investor confidence and possibly a shift in risk appetite. This change could allow the GBP/USD pair to recover if upward momentum continues.
Investors are awaiting the upcoming release of the weekly Initial Jobless Claims data from the US, with expectations set for an increase from 219,000 to 224,000. A larger-than-anticipated rise in claims could exert downward pressure on the US dollar, especially if it triggers a reaction in the market that favorably impacts risk assets. A strong showing from US markets later in the day could further influence GBP/USD by pushing it higher.
From a technical perspective, GBP/USD is currently trading below the 20-period and 50-period Simple Moving Averages on the 4-hour chart. Despite this bearish signal, the Relative Strength Index is showing signs of recovery, suggesting a potential loss of downside momentum. Immediate resistance levels to watch are between 1.2540 and 1.2550, while key support levels are seen at 1.2500, 1.2440, and 1.2400. As the market continues to evolve, observers will closely monitor these levels for further developments.
