- GBP/USD struggles to capitalize on its intraday move up and retreats to the 200-day SMA.
- The weaker-than-expected UK GDP print undermines the GBP and prompts fresh selling.
- Sliding US bond yields, a positive risk tone weigh on the USD and could help limit losses.
- Traders now look forward to the final US Q3 GDP report for some meaningful impetus.
The GBP/USD pair attracts fresh selling in the vicinity of mid-1.2100s on Thursday and retreats to the lower end of its daily range during the mid-European session. The pair is currently placed below the 1.2100 mark and remains well within the striking distance of a nearly three-week low touched on Wednesday, with bearish still awaiting a sustained break below a technically significant 200-day SMA.
The British Pound started losing ground following the release of the final UK GDP print, which showed that the economy contracted by 0.3% in the third quarter, worse than the previous estimate of 0.2%. Adding to this, the yearly growth rate was also revised down to 1.9% from the 2.4% reported previously and adds to a bleak outlook for the UK economy.
This comes on the back of a dovish outcome from the Bank of England (BoE) meeting last week and turns out to be a key factor acting as a headwind for the GBP/USD pair. It is worth recalling that two out of nine BoE MPC members voted to keep interest rates unchanged, suggesting that the central bank is closer to ending the current policy tightening cycle.
The downside for the GBP/USD pair, meanwhile, seems cushioned amid renewed US Dollar selling bias. Despite the Fed's hawkish commentary, investors expect the US central bank to pivot to something more neutral, which leads to a further decline in the US Treasury bond yields. This, along with a positive risk tone, is seen weighing on the safe-haven greenback.
The mixed fundamental backdrop makes it prudent to wait for some follow-through selling below the very important 200-day SMA before placing fresh bullish bets around the GBP/USD pair. Traders now look to the US economic docket, featuring the release of the final Q3 GDP print and Weekly Initial Jobless Claims later during the early North American session.
This, along with the US bond yields and the broader market risk sentiment, will influence the USD price dynamics and provide some impetus to the GBP/USD pair. The focus, however, will remain on the release of the US Core PCE Price Index (the Fed's preferred inflation gauge), due on Friday.
Technical levels to watch
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD holds steady near 1.0650 amid risk reset
EUR/USD is holding onto its recovery mode near 1.0650 in European trading on Friday. A recovery in risk sentiment is helping the pair, as the safe-haven US Dollar pares gains. Earlier today, reports of an Israeli strike inside Iran spooked markets.
GBP/USD recovers toward 1.2450 after UK Retail Sales data
GBP/USD is rebounding toward 1.2450 in early Europe on Friday, having tested 1.2400 after the UK Retail Sales volumes stagnated again in March, The pair recovers in tandem with risk sentiment, as traders take account of the likely Israel's missile strikes on Iran.
Gold price defends gains below $2,400 as geopolitical risks linger
Gold price is trading below $2,400 in European trading on Friday, holding its retreat from a fresh five-day high of $2,418. Despite the pullback, Gold price remains on track to book the fifth weekly gain in a row, supported by lingering Middle East geopolitical risks.
Bitcoin Weekly Forecast: BTC post-halving rally could be partially priced in Premium
Bitcoin price shows no signs of directional bias while it holds above $60,000. The fourth BTC halving is partially priced in, according to Deutsche Bank’s research.
Geopolitics once again take centre stage, as UK Retail Sales wither
Nearly a week to the day when Iran sent drones and missiles into Israel, Israel has retaliated and sent a missile into Iran. The initial reports caused a large uptick in the oil price.