GBP/USD Forecast: No reprieve in sight ahead of today’s important UK/US macro releases

The GBP/USD pair had good two-way moves on Thursday and continues to be influenced by the incoming Brexit headlines. The pair got a minor boost and spiked to an intraday high level of 1.2911 on news that the EU member states are willing to consider a Brexit deal, which will allow Britain to remain in the single market for goods while opting out of the free movement of people. The uptick, however, turned out to be short-lived and met with some fresh supply as investors believed that any such deal is likely to get rejected in the UK Parliament as it will limit the country's ability to strike a new free trade deal.

Adding to this, resurgent US Dollar demand, further boosted by Chicago Fed President Charles Evans' hawkish comments, reaffirming prospects for gradual Fed rate hikes through the end of 2018, exerted some additional downward pressure. The selling bias remained unabated through the Asian session on Friday and was being weighed down by a strong follow-through USD buying interest, primarily led by the EUR/USD pair's bearish breakdown to over one-year lows. 

Currently struggling to hold above the 1.2800 handle, market participants now look forward to a packed economic docket for a fresh bout of volatility on the last trading day of the week. From the UK, the prelim Q2 GDP growth figures, along with manufacturing/industrial production figures for June and the newly introduced monthly GDP estimate for June will be looked upon for some immediate respite for the GBP bulls. 

Any immediate reaction to positive UK economic data might turn out to be short-lived and is likely to remain capped amid growing prospects for a no-deal Brexit. Moreover, the US consumer inflation figures, due for release later during the early North-American session, seems unlikely to hinder the ongoing USD bullish momentum and thus, increases the pair's vulnerability to continue with its well-established bearish trend.

Looking at the technical picture, the pair on Thursday confirmed a fresh bearish breakdown below a short-term descending trend-channel and hence, seems more likely to extend the downward trajectory towards testing August 2017 lows, around the 1.2775-70 region. A follow-through selling has the potential to continue dragging the pair further towards testing sub-1.2700 level in the near-term.

On the flip side, any recovery attempts might now confront fresh supply near the trend-channel support break-point, now turned resistance, around the 1.2840-50 region. Any subsequent up-move beyond the mentioned barrier seems more likely to remain capped at the 1.2900 handle.