GBP/USD remains on the defensive below the mid-1.2600s ahead of US GDP data

The GBP/USD pair holds below the mid-1.2600s during the early Asian trading hours on Thursday. The downtick of the pair is backed by the weaker-than-expected UK inflation data and a modest recovery of the US Dollar (USD). At press time, the major pair is trading at 1.2638, up 0.08% on the day.

US consumers were more optimistic about the US economy in December. The US CB Consumer Confidence rose to 110.7 versus 101.0 prior (revised down from 102.0). Additionally, the annual rate of Existing Home Sales arrived at 3.82M in November, above the market consensus of 3.77M.

The Federal Reserve (Fed) showed a dovish tone after the interest rate decision meeting last week and 75 basis points (bps) of rate cuts are expected in 2024 due to the cooling inflationary pressure. However, traders will take more cues from the economic data this week, including the US GDP growth numbers for the third quarter and the Core PCE Price Index, the Fed's preferred gauge of inflation. The softer-than-estimated data could drag the Greenback lower against the British Pound (GBP).

On the UK docket, the nation’s Consumer Price Index (CPI) came in worse than market expectations, dropping 0.2% MoM in November from 0% in the previous reading and below the 0.1% estimated. On an annual basis, the CPI figure climbed 3.9% versus 4.6% prior, missing the expectation of 4.4%. Finally, the Core CPI, which excludes volatile food and energy prices, rose 5.1% YoY in November from 5.7% in October, below the market consensus of 5.6%. The downbeat UK inflation data exerts some selling pressure on the GBP and acts as a headwind for the GBP/USD pair.

Moving on, the UK will release Public Borrowing data for November. Also, the Q3 Gross Domestic Product (GDP), weekly Initial Jobless Claims, and the Philly Fed Manufacturing Survey will be due later on Thursday.