GBP/USD recovers ground as markets tilt into risk-on sentiment

GBP/USD snapped back above the 1.2600 decisively on Wednesday.

Cable is now bound for a fresh test of 1.2700, but data remains lean.

A raft of widely-expected US data clears the way for US market holiday.

GBP/USD finally broke back above 1.2600 on Wednesday, propelled higher by a broad-market softening in the Greenback’s recent bullish stance. Economic data remains slim on the UK side of the calendar, and following Wednesday’s broad print of US figures that came in broadly as expected, markets are set for a quiet showing for the rest of the week.

Investors will see a notable constraint on market flows on Thursday and Friday: US markets will be entirely shuttered on Thursday for the US Thanksgiving holiday, and Friday will be light as well with most US exchanges cutting their operating hours short. The UK’s data docket remains equally-thin next week, where investors will be pivoting to face another round of US Nonfarm Payrolls figures next Friday, with plenty of preview employment data to muck up the view.

Annualized US Gross Domestic Product (GDP) grew by the expected 2.8% through the third quarter, to no one's surprise and barely moving the needle on investor pulses. Core Personal Consumption Expenditure Price Index (PCEPI) accelerated to 2.8% for the year ended in October, also meeting expectations. While upticks in inflation metrics generally bode poorly for market expectations of future rate cuts, the move upward was widely expected, and a hold in monthly figures at 0.3% MoM helped to frame the bump in the data as being in the rear-view mirror.