GBP/USD pauses pullback from multi-day top near 1.2380 on upbeat UK GDP, US inflation eyed

GBP/USD shows little reaction to better-than-forecast UK economic growth numbers during early Friday. The reason could be linked to the market’s cautious mood ahead of the Federal Reserve’s (Fed) preferred inflation gauge.

That said, the UK’s fourth quarter (Q4) Gross Domestic Product (GDP) came in at 0.1% QoQ versus 0.0% prior forecasts while the yearly figures appear more impressive with 0.6% YoY growth for the Q4 GDP compared to 0.4% earlier estimations. It’s worth noting that the UK’s National Housing Prices for March and Total Business Investment for the Q4 appear dismal and might have probed the GBP/USD bulls ahead of the key US data.

Also read: UK Final GDP revised up to 0.1% QoQ in Q4 vs. 0% expected

Even so, optimism surrounding the UK’s £ 1.8 billion trade deal with Trans-Pacific nations joins the Brexit optimism to favor the bulls. In this regard, the Financial Times (FT) said, “The UK on Friday unveiled an agreement to join an 11-member Asia-Pacific trade bloc, with British prime minister Rishi Sunak claiming it proved his government was seizing ‘post-Brexit freedoms’.”

Also positive was the news suggesting the higher inflation and the Bank of England’s (BoE) hawkish concerns as Reuters said, “British businesses were their most confident this month since May 2022 and pricing expectations, which are being watched by the Bank of England as it grapples with high inflation, cooled to a six-month low, a survey showed on Friday.”

On the other hand, easing hawkish Fed bets and mixed US data, as well as receding pessimism surrounding the global banking sector seem to weigh on the US Dollar ahead of the Core Personal Consumption Expenditure (PCE) Price Index for February.

It’s worth noting that the US Treasury bond yields’ latest retreat allows the US Dollar to pare recent losses and weigh on the GBP/USD as traders wait for inflation data amid hawkish Fed talks.

Technical analysis

Although the overbought RSI (14) might have triggered the GBP/USD pair’s pullback, the 10-week-old horizontal resistance-turned-support around 1.2285-65 appears a tough nut to crack for the Cable bears to break.