GBP/USD remains depressed near 1.2100 mark, moves little post-UK macro data

The GBP/USD pair extends the previous day's retracement slide from the vicinity of the 1.2200 mark, or the weekly high and remains under some selling pressure on Friday. Spot prices languish around the 1.2100 mark through the early European session and react little to the latest UK macro data.

The UK Office for National Statistics reported that the economy contracted by 0.5% in December, down from 0.1% growth reported in the previous month and missing estimates for a 0.3% fall. The Preliminary Q4 GDP print, meanwhile, matched expectations and showed that the economy stagnated during the October-December period as compared to a 0.3% decline in the third quarter. The slight disappointment, however, was offset by better-than-expected UK Manufacturing and Industrial Production figures.

Nevertheless, the mixed economic data fails to push back against market speculations that the Bank of England's rate-hiking cycle is nearing the end and undermines the British Pound. This, along with the prevalent US Dollar buying interest, contributes to the offered tone surrounding the GBP/USD pair. Against the backdrop of hawkish signals from Fed officials, a fresh wave of the global risk-aversion trade turn out to be a key factor that continues to underpin the safe-haven Greenback.

The GBP/USD pair, for now, seems to have snapped a three-day winning streak, though the lack of follow-through selling warrants some caution for aggressive bearish traders. Traders now look forward to the US economic docket, featuring the release of the Preliminary Michigan Consumer Sentiment Index. This, along with a scheduled Fed Governor Christopher Waller's speech, the US bond yields and the broader risk sentiment, will drive the USD and provide some impetus to the GBP/USD pair.

Technical levels to watch