GBPUSD extends slide to 1.1760 after US data and UK budget

• The pound is among the worst performers of the G10 after the autumn budget.
• The dollar remains strong despite the mixed US economic data.
• GBPUSD pared its weekly gains on Thursday and moved away from three-month highs.

The pair GBPUSD it continued to fall during the American session and bottomed out at 1.1760. She then cut the losses by rallying back towards 1.1800. It loses more than 100 points on Thursday, after the US data and the UK budget presentation.

The pound falls after the autumn budget

In the UK on Thursday, Chancellor of the Exchequer Jeremy Hunt presented the Autumn Statement, Prime Minister Rishi Sunak’s budget. The budget was, to a large extent, as expected by analysts. Hunt presented a £55bn tax increase and spending cuts aimed at restoring the UK’s fiscal reputation after a chaotic September and October.

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

The dollar maintains its strength after the US data.

US economic data showed an unexpected decline from the Philadelphia Fed to -19.4 in November from -8.7. Continued jobless claims rose to the highest level since April. Home starts and building permits fell less than expected. The dollar initially doped up after the reports paring gains, but after a few minutes it resumed its bullish path, hitting new all-time highs.

The DXY is around 107.00, up 0.69% on the day. Yields in the US are higher, with the 10-year yield trading at 3.79% and the 2-year Treasury yield at 4.44%.

GBPUSD upside limited while below 1.1950

For the third day in a row, GBPUSD failed to hold above 1.1950 and fell back. The pound needs a daily close above which could open the door for a recovery to 1.20 and higher. The next critical target is the 200-day SMA at 1.2240.

If the ongoing correction continues, the area around 1.1740 is shaping up to be strong support that should favor a bounce. The next support is at 1.1640. A drop below would target the 20-day SMA at 1.1560.

technical levels