GBP/USD hits 12-week highs amid positive data

• GBP/USD rises above 1.2600, boosted by upbeat UK data and a rebound in UK yields.
• US data was mixed, with strong services and composite PMIs, but manufacturing PMI fell into contraction.
• The upcoming speeches by the Governor of the Bank of England and US economic reports will provide new clues for the movement of GBP/USD.

The British Pound (GBP) advances to a new 12-week high against the US Dollar (USD) courtesy of better-than-expected data revealed on Thursday, sparking a sell-off in Gilts; Consequently, UK bond yields rose. The GBP/USD pair is trading at 1.2606 after reaching a high of 1.2615.

GBP/USD hits new highs, boosted by rising UK bond yields and mixed US business activity indicators.

S&P Global revealed that business activity in the United States (US) remains strong after services and composite PMIs beat forecasts. However, the manufacturing PMI fell below the 50 threshold that separates expansion from contraction, painting a mixed scenario for the economy. Next week, the Institute for Supply Management (ISM) will update December readings.

Separately, consumer confidence in the UK improved, while S&P Global/CIPS figures show an improving business outlook, despite manufacturing activity remaining in recessionary territory for the sixth consecutive month.

Recently, Bank of England (BoE) Chief Economist Huw Pill insisted that central banks will continue to fight inflation despite the stagnating outlook for the British economy. Although some legislators had insisted on the need to lower rates, Pill declared that it was too early to consider such a measure.

Although inflation fell from 6.7% to 4.6% in October, it is still double the 2% target set by the BoE.

British Chancellor of the Exchequer Jeremy Hunt’s autumn statement was welcomed by investors. However, growth and inflation estimates were pessimistic at a time when market participants expected the British economy to enter a recession.

Next week, the UK economic agenda will include a speech by BoE Governor Andrew Bailey. In the United States, the agenda will include consumer confidence, Fed speeches, a preliminary GDP reading, inflation data and the ISM Manufacturing PMI.

GBP/USD Price Analysis – Technical Outlook

The GBP/USD daily chart shows the pair on a bullish streak that could extend towards the round 1.2700 level. Breaking this level could expose the August 30 high at 1.2746, followed by the August 22 high at 1.2800. On the other hand, if the pair falls below 1.2600, the November 23 high at 1.2569 would be the first support, followed by today’s low at 1.2524.