GBPUSD extends slide to 1.1760 after UK budget and US data

• Pound among worst performers in G10 space after Autumn budget.
• US Dollar remains strong despite mixed US economic data.
• GBPUSD trims weekly gains on Thursday, and backs away from three-month highs.

The GBPUSD pair dropped further during the American session and bottomed at 1.1760. It then trimmed losses rising back toward 1.1800. It is losing more than a hundred pips on Thursdays, after US data and UK’s budget presentation.

Pound falls after Autumn Budget

On Thursday in the United Kingdom, Chancellor of the Exchequer, Jeremy Hunt presented the Autumn Statement, the budget of the Primer Minister Rishi Sunak. The budget was largely as expected by analysts. Hunt presented an increase in taxes of £55 billion and spending cuts in order to restore the UK’s fiscal reputation after a chaotic September and October.

 “The UK government announced the largest tax increases and spending cuts in a decade, becoming the first major Western economy to start sharply limiting its spending growth after years of ramped-up fiscal stimulus during the pandemic and recent energy subsidies,” reported the WSJ. The pound hit fresh daily lows across the board during the presentation but falling at a moderate pace.

Dollar holds its strength after US data

Economic data from the US showed an unexpected decline in the Philly Fed to -19.4 in November from -8.7. Continuing Jobless Claims rose to the highest level since April. Housing Starts and Building Permits dropped less than expected. The US Dollar initially doped after the reports, trimming gains but after a few minutes it resumed the upside, hitting fresh daily highs.

The DXY is hovering around 107.00, up 0.69% for the day. US yields are higher with the US 10-year bond yield at 3.79% and the 2-year note at 4.44%.

GBPUSD upside limited while under 1.1950

For the third consecutive day, GBPUSD failed to hold above 1.1950 and pulled back. The pound needs to post a daily close above that could open the doors for a recovery of 1.20 and more. The next critical target is the 200-day Simple Moving Average at 1.2240.

If the ongoing correction extends, the area around 1.1740 emerges as a strong support that should favor a rebound. The following support is seen at 1.1640. A slide below would target the 20-day SMA at 1.1560.

Technical levels