GBP/USD pullback fades around 1.2450 as US Dollar rebound lacks support from employment clues

• GBP/USD remains sidelined after refreshing 10-month high.
• Brexit optimism, softer US Dollar initially pleased Cable buyers before a corrective move amid recession chatters.
• UK employment numbers flash downbeat signals and weigh on yields, US Dollar.
• Monthly US jobs report will be crucial to watch, risk catalysts are also important for fresh impulse.

GBP/USD seesaws around 1.2460 during early Thursday in Asia, after a volatile day that initially refreshed the multi-month high before reversing the gains.

The Cable pair rose to the highest levels since June 2022 earlier on Wednesday amid broad US Dollar weakness and Brexit optimism. However, the following rebound in the greenback, due to the recession woes, triggered the much-awaited pullback in prices. It’s worth noting, though, that the USD’s latest rebound ignores downbeat employment clues. Additionally, mixed data at home might have also allowed the GBP/USD pair buyers to take a breather.

On Wednesday, UK’s final readings of S&P Global/CIPS Composite and Services PMIs for March came in mixed as the former confirmed the initial estimations of 52.2 but the key Services gauge improved to 52.9 from 52.8 initial forecasts.

Talking about Brexit, “A new model will be announced later on Wednesday to ‘reduce the need for checks for many types of goods,’” said Sky News while citing an anonymous UK Cabinet Office source speaking on the post-Brexit checks on goods coming to the UK from the European Union (EU).

After a disappointing 19-month low of the US JOLTS Job Openings for February, the ADP Employment Change for March dropped to 145K from 200K expected and an upwardly revised prior of 261K.

On the same line, the final readings of S&P Global Composite and Services PMIs for March also came in downbeat as the former one declined to 52.3 from 53.3 preliminary estimations while the Services PMI dropped to 52.6 from 53.8 anticipated earlier. More importantly, the US ISM Services PMI for the said month amplified pessimism as it dropped to 51.2 versus 54.5 expected and 55.1 prior.

Amid these plays, the recession woes in the US grew stronger and weighed on the US Dollar, together with the latest challenges to its reserve currency status. The same marked downbeat Wall Street close and drowned the US Treasury bond yields. However, the sour sentiment allowed the US Dollar Index (DXY) to recover from two-month low and snap three-day downtrend.

Moving on, a light calendar with only second-tier US data may entertain GBP/USD traders but risk catalysts are more important for clear directions.

Technical analysis

Unless declining back below 1.2445-50 resistance-turned-support, GBP/USD remains on the bull’s radar even if the overbought RSI suggests pullback.