Ella 
In Asia on Monday, GBP/USD broke its winning streak that started last Wednesday and traded around 1.2710. However, GBP/USD found upside support amid mixed US economic data and rising risk appetite.
The U.S. dollar index consolidated around 102.40, with a negative bias that could be affected by a decline in the short-term yield on the two-year U.S. Treasury note. At press time, the two-year Treasury yield fell to 4.38%.
Economic data was mixed, and the USD currency pair was volatile during the session on Friday, with mixed gains and losses. On the positive side, the U.S. Bureau of Labor Statistics reported good developments in the job market, with nonfarm payrolls (NFP) rising to 216,000 in December, better than the previous reading of 173,000 and the estimate of 170,000.
However, the Services Purchasing Managers Index (PMI) released by the Institute for Supply Management (ISM) in December was 50.6, lower than the expected 52.6 and the previous value of 52.7, indicating a slowdown in the growth of the service industry.
Thomas Barkin, president of the Federal Reserve Bank of Richmond, expressed his views on the U.S. labor market, saying that the U.S. labor market is showing a steady weakening trend and is unlikely to reaccelerate at this time. Barkin stressed that the labor market is unlikely to re-accelerate at this time.
Dallas Fed President Lorie Logan expressed her views on the outlook for monetary policy, saying that given the recent easing of financial conditions, the possibility of raising interest rates should not be ruled out. Logan’s emphasis on avoiding premature easing to prevent a potential demand boost reflects the delicate balance the Fed is trying to maintain.
Recent upbeat economic indicators in the UK may be one of the reasons for the pound’s positive performance. UK consumer credit data showed personal borrowing improved in November. Additionally, the S&P Global/CIPS Composite Purchasing Managers’ Index (PMI) showed positive signs in December, with the services sector PMI rising.
Sterling may come under selling pressure amid a pessimistic outlook for the UK economy. Investors appear to expect policymakers at the Bank of England (BOE) to make challenging decisions and weigh the trade-offs between the risk of a recession in the UK economy and persistently high underlying inflation.
Calls for swift action are growing as British business executives urge the Bank of England to cut interest rates quickly. The call is seen as a key measure to provide much-needed support to the struggling economy. The Institute of Directors Economic Confidence Index survey added to these concerns, highlighting the continued decline in optimism among British business executives about the country’s economic prospects.
Investors will look to the British Retail Consortium’s (BRC) like-for-like retail sales data on Tuesday and manufacturing production data on Friday to provide new signals on the UK’s economic outlook.
