Photo by Colin Watts on Unsplash 

The British Pound (GBP) loses ground against the US Dollar (USD) on Thursday as solid economic data in the US trumps an upbeat Gross Domestic Product (GDP) report in the United Kingdom (UK). At the time of writing, GBP/USD trades at 1.3367, down 0.53%.

Sterling weakens despite upbeat UK GDP as robust US jobs and manufacturing data lift the Greenback
 

Investors’ mood improved on Thursday due to a strong Initial Jobless Claims report for the week ending January 10. The print was below the 215K projection, at 198K, well below the prior’s number of 207K. At the same time, the New York Empire State Manufacturing Index for January improved from -3.7 to 7.7. Meanwhile, the Philadelphia Fed Manufacturing Survey for the same period exceeded estimates of -2 and jumped sharply by 12.6.

The Greenback staged a rally after the data release, surging to a new six-week high as depicted by the US Dollar Index (DXY). The DXY, which tracks the performance of the American currency against six peers, is up 0.33% to 99.38.

Worth noting that money markets had priced in less easing by the Federal Reserve (Fed), with investors trimming the odds from 52 to 48.5 basis points of easing towards the year’s end.

Recently, Fed officials Raphael Bostic and Austan Goolsbee crossed the wires. Bostic said that he expects the economy to grow above 2%, though expects inflationary pressures to continue and the Fed needs to be restrictive. Goolsbee said that he was not surprised by jobless claims data, reiterating that the most important thing is getting inflation back to 2%.

In the UK, the economy grew above estimates in November, but it didn’t move the needle regarding the rate cut expectation of the Bank of England (BoE). GDP in November expanded by 0.3% MoM, following October’s 0.1% contraction, official data showed on Thursday.

The swaps market had priced in 42 basis points of easing by the Bank of England by the end of 2026, revealed Prime Market Terminal data.
 

Source: Prime Market Terminal

What’s in the calendar for January 16?
 

The UK docket is empty, but in the US, traders would eye Industrial Production and speeches by Fed Governors Michelle Bowman and Philip Jefferson.

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