GBP/USD struggles for a firm intraday direction, hovers around 1.2400 ahead of US GDP

The GBP/USD pair continues with its struggle to gain any meaningful traction and extends its rangebound price action heading into the North American session. The pair is currently placed just below the 1.2400 mark, awaiting a fresh catalyst before the next directional move.

Traders now seem to have moved to the sidelines and look to the first estimate of the fourth quarter US GDP report for a fresh impetus. In the meantime, an intraday pickup in the US Treasury bond yields and a softer risk tone assist the safe-haven US Dollar to stage a modest recovery from an eight-month low. This, in turn, acts as a headwind for the GBP/USD pair, though the downside seems cushioned, at least for the time being.

Rising bets for a smaller 25 bps Fed rate hike move in February should keep a lid on any meaningful upside for the US bond yields and hold back the USD bulls from placing aggressive bets. Furthermore, speculations that elevated consumer inflation will force the Bank of England (BoE) to continue lifting rates should offer some support to the British Pound. This supports prospects for some meaningful upside for the GBP/USD pair.

Traders, however, seem reluctant ahead of the key US macro releases - the Advance Q4 GDP print, Durable Goods Orders and New Home Sales data. The focus will then shift to the US Core PCE Price Index, due on Friday, which will play a key role in influencing the Fed's rate-hike path. This, in turn, will drive the USD demand and determine the near-term trajectory for the GBP/USD pair ahead of next week's crucial central bank event risks.

Finally, from a technical perspective, the Cable is in a medium-term uptrend ever since reversing at the September 2022 lows, and this gives bulls an added advantage. Scoping in, GBP/USD remains rangebound within an 8-day-long consolidation the ceiling of which is at 1.2450 and the floor at 1.2260. The fact the oscillators are in neutral territory - if subdued - on most timeframes suggests the pair has room to continue rising if it can successfully break above the range highs. Such a move might be expected to rise up to circa 1.2600, or at a conservative estimate 1.2530 (the height of the consolidation extrapolated 100% and 61.8% higher respectively).

Alternatively, a break below the last higher low of the uptrend, which marks the range floor at 1.2260 and the low of January 24, would change the picture to one that is more bearish, and suggest further downside to a target zone between 1.2150-1.2200. For things to turn really ugly for GBP/USD traders you'd need to see a break and close below the long-term trendline at about 1.2170-90.  

Technical levels to watch