The greenback remains under pressure in the Thursday session, tumbling to multi-week lows against the sterling at 1.5372 and falling toward the 1.38-handle versus the euro. Weekly jobless claims, released earlier in the session improved to 467k, beating consensus estimates for an increase to 540k, from a week earlier at 492k.

The key highlight will be Friday's December labor report. The December unemployment rate is expected to spike to its highest level since 1993 at 7.0%, while non-farm payrolls are seen reflecting a loss of 550k jobs compared with a loss of 533k jobs a month earlier. With the dismal labor report largely priced in, we look for a potential move to the upside in the greenback against the euro and sterling as traders book profits from the sharp gains in both currencies.

Sterling Whipsaws on BoE

The pound initially surged across the board following the monetary policy decision by the Bank of England, rallying to its highest level since mid-December against the dollar at 1.5372 and euro at 0.8895. The Bank of England, as expected, slashed its benchmark interest rate by 50-basis points to an all-time low at 1.5% in order to jumpstart the ailing UK economy. In the accompanying statement, the Bank offered a bleak assessment, stating business surveys suggest that the pace of contraction in activity increased during the fourth quarter of 2008 and that output is likely to continue to fall sharply during the first part of this year, with the outlook for business and residential investment has deteriorated. The Bank expects inflation to decline further, reflecting waning contributions from retail energy and food prices, but expressed caution for a significant risk of undershooting the 2% CPI inflation target in the medium term at the existing Bank Rate.

UK economic reports due out in the coming session include November industrial production, producer prices, and manufacturing output. Industrial output is mixed, improving to -0.6% in November compared with a -1.7% decline in the previous month while falling by 5.3% from -5.2% a year earlier.

Cable pulled off its multi-week highs against the greenback to retreat beneath the 1.52-handle. Support is seen at 1.5160, followed by 1.5130 and 1.51. Subsequent floors are eyed at 1.5070, backed by 1.5030 and 1.50. On the upside, gains will target interim resistance at 1.5240, followed by 1.5280 and 1.53. Additional ceilings will emerge at 1.5330, backed by 1.5370 and 1.54.