GBP/USD finds support near 1.2100, pares intraday losses on weaker US GDP print

• GBP/USD defends the 1.2100 mark and stalls its intraday pullback from a nearly one-month low.
• A technical recession in the US forces the USD to trim a part of its gains and offers some support.
• The UK political/Brexit uncertainty warrants some caution before placing aggressive bullish bets.

The GBP/USD pair finds some support near the 1.2100 mark and stalls its intraday retracement slide from the 1.2200 neighbourhood, or a nearly one-month high touched earlier this Thursday. Spot prices recover a few pips during the early North American session following the release of the Advance US GDP report

According to the first estimate released by the US Bureau of Economic Analysis, the world's largest economy contracted by 0.9% annualized pace during the April-June period. The reading turns out to be worse than the 0.4% growth estimated and follows a 1.6% contraction in the previous quarter, confirming a technical recession. The US dollar is trimming a part of intraday recovery gains, which, in turn, assists the GBP/USD pair to bounce back closer to the mid-1.2100s.

The data, however, adds to growing market worries about a global economic downturn and continues to weigh on investors' sentiment. This is evident from a generally weaker tone around the US equity futures, which, along with an uptick in the US Treasury bond yields, could offer support to the safe-haven buck. Hence, it would be prudent to wait for sustained strength beyond the 1.2200 mark before positioning for any further appreciating move for the GBP/USD pair.

The downside, meanwhile, is likely to remain cushioned, at least for the time being, in the wake of rising bets for a 50 bps rate hike by the Bank of England at its upcoming policy meeting in August. The mixed fundamental backdrop further warrants some caution for aggressive traders amid the UK political uncertainty and Brexit woes.

Technical levels to watch