GBP/USD bulls firm above 1.2000 psychological support area

• GBP/USD bulls move in to guard 1.2000 vs. the strong US Dollar.
• Federal Reserve is expected to continue raising rates in 2023, weighing on GBP. 

GBP/USD is holding above 1.2000 support and has traded between a range of 1.2017 and 1.2044 so far. The US Dollar was supported by positive US data that could keep the Federal Reserve hawkish for longer.

US data fires up the US Dollar

For one, Weekly Jobless Claims in the US rose less than expected. The Department of Labor said seasonally adjusted numbers of initial unemployment claims rose by 2,000 to 216,000 in the week ended Dec. 17. The consensus on Econoday was for a 225,000 print. The previous week's level was revised up by 3,000 to 214,000. The four-week moving average tallied 221,750, sliding by 6,250 from the previous week's revised average of 228,000. Unadjusted claims declined 4,064 on a weekly basis to 247,867.

Elsewhere in the third quarter (Q3), Gross Domestic Product (GDP), arrived at 3.2% versus 2.9% previous consensus. Personal Consumption Expenditure (PCE) Prices match 4.3% QoQ estimations during Q3 2022 whereas the Core PCE improved to 4.7% QoQ versus 4.6% market forecasts. Subsequently, the DXY popped into the 104.50s from a low of 103.75. The US Dollar, however, remains well below the highs for the month near 107.20 while US Treasury yields also edge up following the data on Thursday. 

Meanwhile, analysts at Brown Brothers Harriman noted that the current consensus for Nonfarm Payrolls stands at 208k vs. 263k in November, with the Unemployment Rate seen steady at 3.7% and average hourly earnings falling a tick to 5.0% YoY. ''While job growth is clearly slowing, it’s not by enough to materially impact unemployment and so we continue to believe that the Fed will have to do more than the market is expecting.''