GBP/USD off lows, still below 1.2450 ahead of US GDP

Fresh bids emerged once again near the 1.2425 region last hour, allowing a tepid bounce in GBP/USD back towards the midpoint of the 1.24 handle. But the renewed upside appears to lack follow-through amid increased odds of a no-deal Brexit and ahead of the critical US growth numbers and trade talks.

The British currency witnessed a fresh leg lower versus its US counterpart in Europe, following quiet Asian trading, as the renewed jitters over a Brexit deal dented the sentiment around the pound. Brexit anxiety returned to markets amid a clash between the EU leaders and the UK PM Johnson, after the European Commission President Jean-Claude Juncker told Johnson that the Brexit deal is not renegotiable and the best one.

Further, the pound remains undermined by the latest reports, citing that Johnson is in favor of no Irish back-stop that only increases the risks of a no-deal Brexit, as the new UK PM and his team remains committed to leaving the European Union (EU) on October 31^st.

Softer US GDP to rescue Cable bulls?

On the US-side of the equation, declining odds of a 50bps July Fed rate cut, in the wake of above-forecast US durable goods, wholesale sales and jobless claims data, continue to keep the greenback stronger near two-week highs against its main competitors. Broad-based US dollar strength also collaborates to the downside bias in the spot.

Markets now eagerly await the highly-influential US advance Q2 GDP for fresh dollar trades and its eventual impact on the pair. The US economy is likely to have expanded by 1.8% y/y in Q2 vs. a 3.1% growth seen in the previous quarter. The latest recovery in the major could gather momentum should the US macro data disappoint and fuel a broad USD sell-off.

Also, in focus, remains next week’s US-China trade talks and FOMC policy decision, which are likely to keep the moves limited.  

GBP/USD levels to watch