GBP/USD: Bears refresh five-week low to attack 1.2200, US Jobless Claims eyed

• GBP/USD drops for the fourth consecutive day.
• Downbeat UK data, Brexit/virus fears keep the British Pound heavy.
• US Dollar stays firm amid broad risk-off sentiment.
• US Jobless Claims may extend downward trajectory.

GBP/USD drops to 1.2210, down 0.16% on a day, while heading into the London open on Thursday. The pair recently declined to 1.2204, the lowest since April 07, before bouncing back just to stay near the bottom.

While downbeat UK fundamentals, comprising sluggish data, coronavirus outbreak and Brexit worries, keep the pair heavy, broad US dollar strength seems to top all.

The greenback takes the bids due to its safe-haven demand while also playing with the odds of the Fed’s negative interest rates. The risk-aversion wave has recently gained clues from the second wave of virus spread in major economies as well as the US-China tussle. That said, the US Dollar Index (DXY), a gauge of the greenback versus major currencies, register 0.07% gains to 100.28 while writing.

On the other hand, Wednesday’s downbeat performance of the UK data dump pushed British Chancellor Rishi Sunak towards saying, "It is now very likely that the UK economy will face a significant recession this year, and we're already in the middle of that as we speak," per the BBC.

However, the BOE Governor Andrew Bailey renewed hopes that the UK’s central bank can help the nation overcome the extra debt piled during the virus crisis and avoid the need for austerity.

Elsewhere, Brexit negotiations continue to flash mixed clues with the latest one from The Guardian suggesting that the government has privately conceded there will be post-Brexit checks on goods crossing the Irish Sea, months after Boris Johnson insisted there would be no such trade barriers.

The US Jobless Claims for the week ended May 08 may help the US dollar to extend its latest run-up if matching 2500K forecast versus 3169K prior. Considering this, TD Securities said, “Google search activity suggests that jobless claims will fall again, with the level still high. We forecast a drop to 2.7mn from 3.2mn last week and as high as 6.9mn in the last week of March. Claims averaged 212k per week in the first 10 weeks of the year.”

Technical analysis

GBP/USD carries its downside break of an ascending trend line from March 24. As a result, sellers remain hopeful to target 1.2130 support comprising March 18 top and March 27 low. Alternatively, the pair’s pullback moves beyond the support-turned-resistance line of 1.2285 will have 10-day EMA and a two-week-old descending trend line, respectively around 1.2330 and 1.2355, as following upside barriers.