GBP/USD faces resistance at 1.1930 after rebounding off YTD lows at 1.1800s

• GBP/USD is on track to finish Thursday’s session with gains of 0.70%.
• Unemployment claims in the US take off some pressure from the Federal Reserve as the labor market cools down.
• GBP/USD Price Analysis: To remain downward bias unless bulls reclaim 1.2000.

GBP/USD bounces off the YTD lows of 1.1802 and rises above 1.1900, following Powell’s two-day appearance at the US Congress. Although Powell’s stance turned hawkish, US Thursday’s data might help the Fed to gradually increase rates, though further confirmation is needed on Friday’s Nonfarm Payrolls. At the time of writing, the GBP/USD is trading at 1.1905 after hitting a low of 1.1828.

Rising unemployment claims improved market sentiment, so the GBP rises

Data revealed by the BLS, Jobless Claims for the week ending on March 4 were 211K higher than expected at 195K. Despite a strong ADP report on Wednesday and more job openings than anticipated, rising unemployment claims could ease the tightness of the labor market. A downbeat US Nonfarm Payrolls report, coupled with high unemployment claims, could reduce the Federal Reserve’s (Fed) needs to tighten conditions at a faster pace.

The US Dollar Index (DXY) edges down by 0.40%, at 105.225, a tailwind for the previously battered Pound Sterling (GBP). In addition, US Treasury bond yields are easing ahead of an essential jobs report and next Tuesday’s inflation data.

On the UK front, an employment report will be released on March 14. Furthermore, the Chancellor of the Exchequer, Jeremy Hunt, will announce the spring budget. Aside from this, money market futures are pricing in a 91% chance that the Bank of England (BoE) will increase rates by 25 bps on the BoE’s next meeting on March 23.

GBP/USD Technical analysis

After the GBP/USD fell to fresh YTD lows at 1.1802, the pair recovered some ground but clashed on an upslope trendline; previous support turned resistance around 1.1930s. The daily Exponential Moving Averages (EMAs) reinforced the downtrend following the formation of a death cross that happened on February 3, which exacerbated the GBP/USD’s fall. Also, for a bullish continuation, the GBP/USD must conquer 1.2000. Contrarily, the GBP/USD first support would be 1.1900, which, once cleared, could pave the way to retest the YTD lows and 1.1800.