GBP/USD holds comfortably above 1.3200 mark, moves little post-UK macro data
|- GBP/USD struggled to capitalize on the overnight modest recovery gains from a one-year low.
- Reduced BoE rate hike bets, mostly disappointing UK macro data capped gains for the GBP.
- An uptick in the US bond yields, hawkish Fed expectations acted as a tailwind for the buck.
- Investors, however, preferred to wait on the sidelines ahead of the US consumer inflation.
The GBP/USD pair held on to its modest intraday gains near the 1.3220-25 region and had a rather muted reaction to the UK macro data dump.
The pair edged higher during the early part of the trading action on Friday and was looking to build on this week's recovery move from a one-year low, around the 1.3160 region touched on Wednesday. A subdued US dollar price action was seen as a key factor that extended some support to the GBP/USD pair, though a combination of factors kept a lid on any meaningful gains.
Expectations that the imposition of fresh COVID-19 restrictions in England could force the Bank of England to delay its decision to hike interest rates at its December policy meeting. This, along with persistent Brexit-related uncertainties, acted as a headwind for the British pound and held back traders from placing aggressive bullish bets around the GBP/USD pair.
In the latest Brexit development, French President Emmanuel Macron accused the current UK government of failing to keep its word on Brexit and fishing licences. Adding to this, Annick Girardin, France's sea minister warned on Thursday that it would call on the EU to go to litigation if the 53 licences awaiting UK approval are not granted by Friday evening.
On the economic data front, the UK monthly GDP print fell short of market expectations and showed a modest 0.1% growth in October. This marked a notable deceleration from the 0.6% rise reported in the previous month and was accompanied by the disappointing release of Industrial/Manufacturing Production data, which, in turn, did little to impress the GBP bulls.
On the other hand, a softer risk tone extended some support to the safe-haven US dollar amid an uptick in the US Treasury bond yields. This, along with hawkish Fed expectations, further underpinned the greenback and capped the upside for the GBP/USD pair. Investors also preferred to wait on the sidelines ahead of the US consumer inflation figures.
The markets have been pricing in the possibility for an early policy tightening by Fed amid worries about rising inflationary pressure. Hence, the market focus will remain glued to the US CPI report, which will influence the Fed's policy outlook. This will influence the near-term USD price dynamics and provide a fresh impetus to the GBP/USD pair.
Technical levels to watch
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.