GBP Shrugs Off Dollar Strength

GBP Holds Firm Against USDGBP has been one of the better performers against USD this week. Despite the broad strength we’ve seen across USD pairs, GBPUSD has remain well supported, even with today’s better-than-forecast US jobs data. One explanation for this is the latest BOE meeting which saw the bank striking a more hawkish tone than many anticipated. The bank was seen sticking to its guns in terms of emphasising its willingness to tighten further if necessary, in line with remaining inflation risks.UK Inflation FallingThe message, which felt firmly juxtaposed with the Fed’s more dovish guidance, has helped keep GBP well supported in recent weeks. This comes despite a fresh downturn in inflation, as evidenced in the latest CPI data in December which showed headline CPI slowing to 3.9% over November, down from 4.6% prior, marking its lowest level since 2021.  One view here is the better growth prospects for the UK as a result of falling inflation helping lift GBP sentiment.UK PMI Data ImprovesThe release of the latest UK construction PMI data today has further added to bullish sentiment. The reading jumped to 46.8 from 45.5 prior, above the 46.1 the market was looking for. Though still below 50, the data means the overall PMI reading for the UK jumped to 51.7 last month, up from 50.2 over the prior month, suggesting the economy is making progress once again. Looking ahead, traders will be closely watching incoming data as well as monitoring BOE commentary ahead of the first BOE meeting of the year.Technical ViewsGBPUSDThe rally in GBPUSD has stalled for now above the 1.2569 level. However, while this level holds as support (along with the bull channel lows), the focus is on a fresh push higher and a test of the 1.2992 level next. Should we break below 1.2659, however, focus will shift to the 1.2437 level as next support to watch.