GBP/USD remains on the defensive below the 1.2700 area, UK GDP eyed

The GBP/USD pair remains on the defensive around 1.2680 during the early Asian session on Friday. Market participants turn cautious ahead of the top-tier economic data released from the UK and US.

Market players anticipated that the UK could avoid the recession as the data shows inflationary pressures easing. The highlight of the day will be the UK monthly Gross Domestic Product (GDP) report on Thursday. The growth rate is expected to grow by 0.2% in June, compared to 0.1% prior. While the quarterly GDP is expected to stay at 0% versus 0.1% prior.

The weaker than expected figure could refrain the Bank of England (BoE) from aggressively tightening policy. This, in turn, weighs on the Pound Sterling and acts as a headwind for the GBP/USD pair.

On the US Dollar front, the US Consumer Price Index (CPI) rose to 3.2% YoY from 3% in June. The figure was below the market consensus of 3.3%. While the Core CPI figure, which excludes volatile food and energy prices, fell to 4.7% from 4.8%. Additionally, the US Initial Jobless Claims increased to 248,000, above the expectation of 230,000. In response to the data, the US Dollar reversed its course and strengthened against its rivals.

The CME FedWatch Tools indicated that the odds for a rate hike in September is at 10%, while for the November meeting, it dropped to 23.6% from 33.8% a month ago.

Moving on, the UK will release the preliminary Q2 Gross Domestic Product (GDP) on Friday. Also, the UK Industrial Production and Manufacturing production data will be due. On the US docket, the key event will be the US Producer Price Index (PPI) for July. These data could provide hints for a clear direction in GBP/USD.