GBP/USD eyes first weekly loss in five around 1.2180 amid fears surrounding UK economy

• GBP/USD takes offers to reverse the previous day’s corrective bounce.
• Slump in UK’s house prices, easing momentum in labor market keeps bears hopeful.
• US Dollar remains sluggish pre-Fed blackout of policymakers, downbeat Treasury yields.
• Second-tier data, risk catalysts are the key to fresh impulse.

GBP/USD renews its intraday low around 1.2180 as it braces for the first weekly loss in five during early Thursday. The Cable pair’s latest downside could be linked to the corrective bounce in the US Dollar. However, fears surrounding the British economy appear to be a major challenge for the pair traders.

Reuters came out with the news conveying a slump in the UK’s house prices to portray pessimism for the GBP/USD. “Britain saw the most widespread house price falls since early in the COVID-19 pandemic last month, as demand from buyers and sales activity slowed in the face of higher borrowing costs, a survey showed on Thursday,” said the news.

On the same line, the monthly index of demand for staff from the Recruitment and Employment Confederation (REC) also weighed on the GBP as it fell in November to 54.1 from 56.7 in October by testing the lowest levels since February 2021.

Additionally, looming labor strikes in England and Wales push the UK government to witness more hardships even if Prime Minister Rishi Sunak pledged to take more action "to protect the lives and livelihoods" of Britons during months of planned strikes by rail, health and postal workers, per Reuters.

It should be noted that the slump in the US Treasury yields and a light calendar drowned the US Dollar the previous day. That said, the benchmark 10-year Treasury bond yields dropped to the lowest levels since early September by losing 3.30% on Wednesday. On the same line, the two-year counterpart dropped 2.54% amid the rush for risk safety. With this, the US Treasury bond yield curve, the difference between the long-dated and the short-term bond yields, inverted the most in over forty years and highlighted the recession woes.

However, the recently sour sentiment in the market, as portrayed by the six-day downtrend of the S&P 500 Futures, seems to underpin the US Dollar’s safe-haven demand. Mixed headlines surrounding China and Russia could be linked to the latest risk-off mood.

Russian President Vladimir Putin’s threat of using nuclear weapons contrasts the latest comments from German Chancellor Olaf Scholz suggesting easing the risks of Moscow using nuclear weapons. Furthermore, China’s gradual easing of the Zero-Covid policy appears as a passive reopening and struggles to impress the bulls.

Moving on, a light calendar in the UK and the US, except for the US Initial Jobless Claims for the week ended on December 02, emphasizes risk catalysts as the key to fresh impulse.

Technical analysis

A one-month-old rising wedge bearish chart pattern, currently between 1.2130 and 1.2420, keeps GBP/USD sellers hopeful.