Anna 
The British Pound (GBP) struggled to find firm ground on Friday, trading around 1.2670 against the U.S. Dollar in the early European session. The uncertainty ahead of crucial U.S. economic data weakened market risk appetite, leading to significant selling pressure on GBP/USD. The U.S. Dollar’s rebound contributed to the selling pressure, with investors perceiving a challenging decision for Bank of England (BOE) policymakers amid deepening economic recession risks and elevated potential inflation rates in the UK.
The possibility of a technical recession in the UK remains high, as the country’s economy contracted in the third quarter, and stagnation is expected in the final quarter. Furthermore, recent Purchasing Managers’ Index (PMI) data indicates ongoing challenges in the manufacturing sector due to elevated interest rates.
The future trajectory of GBP/USD will be guided by the U.S. December nonfarm payroll data scheduled for release at 13:30 GMT. If the data reflects a further cooling in the U.S. labor market, there may be an improved outlook for GBP/USD, despite better-than-expected employment-related indicators such as ADP, job vacancies, and unemployment claims.
