Breaking: GBP/USD crosses 1.2600 to refresh one-year high amid broad US Dollar weakness ahead of US NFP

• GBP/USD takes the bids to refresh multi-day high, up for the third consecutive day.
• US Dollar fails to cheer mostly firmer data amid dovish Fed concerns.
• Hawkish BoE concerns, cautious optimism in the market adds strength to the Cable pair’s rally.
• US jobs report for April eyed for clear directions.

GBP/USD rises for the third consecutive day to prod the late May 2022 high, piercing the 1.2600 threshold during early Friday. In doing so, the Cable pair cheers broad US Dollar weakness, as well as recently upbeat UK data, ahead of the key US Nonfarm Payrolls (NFP).

US Dollar Index (DXY) retreats to 101.18, fading the previous day’s corrective bounce off a one-week low, as markets remain convinced of the Federal Reserve’s (Fed) policy pivot after recently mixed US data and Fed meeting.

The preliminary readings of the US Nonfarm Productivity and Unit Labor Cost for the first quarter (Q1) of 2023 came in mixed. That said, Nonfarm Productivity dropped to -2.7% in Q1 from 1.6% prior and -1.8% market forecasts whereas the Unit Labor Cost jumped to 6.3% versus 5.5% expected and 3.3% prior. Further, the US Goods and Services Trade Balance improved to $-64.2B from $-70.6B prior and $-63.3B market forecast. Further, Initial Jobless Claims edge higher to 242K for the week ended on April 28 versus 240K expected and 229K in previous readings.

US banking sector woes join looming default fears to challenge the market sentiment. However, recent actions from the US policymakers and comments suggesting no immediate fears of the banking crisis seem to exert downside pressure on the US Dollar.

On the other hand, the upbeat revision of the UK’s activity numbers for April strengthened the hawkish bias surrounding the Bank of England (BoE) and propels the Cable pair.

That said, the final readings of the UK’s S&P Global/CIPS Services PMI rose past 54.9 initial forecasts to 55.9 for April while the Composite PMI also increased to 54.9 versus 53.9 flash estimations for the said month.

Amid these plays, S&P 500 Futures print mild gains even if Wall Street benchmarks closed with losses. Further, the US Treasury bond yields ended Thursday’s North American session on the downside but an absence of Japanese traders limit bond market moves in Asia.

Looking forward, the UK Constriction PMI for April and risk catalysts may entertain GBP/USD pair traders ahead of the all-important US jobs report for April. Forecasts suggest an easing in the headline Nonfarm Payrolls (NFP) figures to 179K versus 236K prior, which in turn can propel the Gold price on marching forecasts.

Technical analysis

A clear upside break of a one-month-old resistance line near 1.2600 keeps GBP/USD buyers directed towards the mid-2022 peak of around 1.2665.