Despite Latest Gains, Could UK Pound’s Volatility Persist?

The British Pound adheres to latest gains, benefiting from the optimistic market sentiment and Thursday’s weaker US Dollar.

The US Bureau of Labor Statistics (BLS) revealed that Initial Jobless Claims for the week ended on December 24 rose by 225K, in line with expectations. The same report showed that continuing claims jumped to 1.7 million in the week that ended on December 17, the highest since early February.

In light of the US Jobless Claims reading, aligned with estimates, it is obvious that the labour market is still tight and so, the data failed to boost the US Dollar. Traders expect a 25 bps rate hike by the Fed’s first policy meeting in the new year, next February. The GBP/USD pair is trading at 1.2063 at the time of writing and could worsen below 1.2000.

The Sterling is sideways during the US session after hitting the 1.2005 daily low against the dollar. Risk aversion spurred by news on China’s attempt to live with the coronavirus keeps investors uneasy. Wall Street is expected to witness a higher open, in line with European stock indices.

On Friday, the UK economic docket is empty, while the US calendar will feature the Chicago PMI for December, estimated at 40.

From a daily chart perspective, the GBP/USD upside was capped by the 200 and the 20-day Exponential Moving Average (EMA), each at 1.2111 and 1.2082.