GBP/USD is at fresh two-week lows testing the 1.2675 resistance area

• The Pound takes advantage of US Dollar weakness to hit fresh two-week highs at 1.2675.
• A higher-than-expected increase in US Jobless Claims has increased bearish pressure on the Dollar.
• GBP/USD is testing an important resistance area at 1.2675.

The Sterling is building up bullish momentum on Thursday, buoyed by a favourable market sentiment, which is weighing on the safe-haven US Dollar.

Data from the US Labor Department revealed that Jobless Claims increased by 222K in the last week of March 29, from the upwardly revised 212K in the previous week. The market had anticipated a softer 214K increase.

Fed cut hopes are weighing on the USD

These figures together with the unexpectedly weak US Services data seen on Wednesday have restored investors confidence that the Fed might start cutting rates in June. This has improved risk appetite, capping the recovery of US Treasury yields and pushing the US Dollar lower.

Earlier this week, UK data showed that manufacturing activity expanded for the first time in the last two years. This has improved the outlook in the country’s economy, providing a fresh impulse to the Sterling.

The technical picture remains bearish, with the pair approaching an important support area at 1.2675-1.2695. Above here, the next target would be 1.275 and the March 21 high AT 1.2800. Supports are 1.2570 and 1.2535.