GBP/USD struggles to gain traction, remains on the defensive around 1.1500 mark

• GBP/USD fails to build on the overnight bounce from the lowest level since 1985.
• The UK’s bleak economic outlook acts as a headwind for sterling and the major.
• Subdued USD price action also does little to impress bulls or lend any support.

The GBP/USD pair struggles to capitalize on the previous day's bounce from the 1.1400 neighbourhood, or the lowest since 1985 and oscillates in a range on Thursday. The pair is seen trading around the 1.1500 mark during the early European session and seems vulnerable to prolonging a nearly one-month-old bearish trajectory.

The proposed £30bn of tax cuts and a cap on energy bills for households by the new British Prime Minister Liz Truss adds to the UK debt market concerns. Furthermore, the Bank of England policymakers, testifying before the Parliament's Treasury Committee on Wednesday, failed to reinforce bets for a more aggressive rate hike. This is seen as a key factor that continues to weigh the British pound and acts as a headwind for the GBP/USD pair.

The US dollar, on the other hand, is seen consolidating the previous day's sharp retracement slide from a two-decade high. Signs of stability in the financial markets seem to undermine the safe-haven buck, though does little to impress bullish traders or provide any meaningful impetus to the GBP/USD pair. Adding to this, expectations that the Fed continue to tighten its monetary policy to tame inflation lends some support to the greenback.

The aforementioned fundamental factors, along with the worsening outlook for the UK economy, suggest that the path of least resistance for the GBP/USD pair is to the downside. Hence, any recovery attempt might still be seen as a selling opportunity and runs the risk of fizzling out rather quickly. Market participants now look forward to Fed Chair Jerome Powell's speech, which might influence the USD later during the early North American session.

Traders will further take cues from the highly-anticipated European Central Bank decision for some cross-driven movement around sterling. In the meantime, the GBP/USD pair is more likely to prolong its subdued/range-bound price action amid absent relevant market-moving economic releases from the UK.

Technical levels to watch