- GBP/USD staged a modest intraday bounce from YTD lows, albeit lacked follow-through.
- Disappointing UK GDP print capped the upside for the GBP amid Brexit woes, dovish BoE.
The GBP/USD pair held on to its modest intraday gains heading into the European session, albeit retreated a few pips from daily tops following the release of UK macro data.
Having shown some resilience below the 1.3400 mark, the GBP/USD pair staged a modest bounce from the lowest level since December 2020 touched earlier this Thursday. The uptick, however, lacked bullish conviction or a strong follow-through buying, instead lost some steam in reaction to the disappointing release of the Prelim UK GDP report.
The first estimate showed that the UK economy expanded by 1.3% during the July-September period as against 1.5% expected, marking a sharp deceleration from 5.5% growth reported in the previous quarter. Adding to this, the UK Manufacturing and Industrial production figures also fell short of consensus estimates and weighed on the sterling.
This comes on the back of growing market concerns that the UK government will trigger Article 16 of the Northern Ireland Protocol. Apart from this, the Bank of England's dovish decision to hold interest rates steady last week favours bearish traders and supports prospects for an extension of over a three-week-old downward trajectory.
The negative outlook is reinforced by the prevalent strong bullish sentiment surrounding the US dollar, bolstered by expectations for an early policy tightening by the Fed. That said, relatively thin liquidity conditions, on the back of the US bank holiday in observance of Veterans Day, might hold back bearish traders from placing fresh bets.