GBP/USD consolidates in a range around 1.2200 mark as traders await fresh catalyst

• GBP/USD lacks any firm direction and oscillates in a narrow trading range on Thursday.
• Subdued USD demand lends some support, though recession fears seem to cap the pair.
• Traders also seem reluctant ahead of the crucial FOMC/BoE policy meetings next week.

The GBP/USD pair struggles to capitalize on the overnight recovery from the 1.2100 neighbourhood, or the weekly low and oscillates in a range through the early European session on Thursday. The pair is currently trading around the 1.2200 round-figure mark, nearly unchanged for the day.

The latest optimism over the easing of COVID-19 curbs in China is seen undermining the safe-haven US Dollar, which, in turn, offers some support to the GBP/USD pair. That said, rebounding US Treasury bond yields, along with growing recession fears, should act as a tailwind for the greenback. Traders might also refrain from placing aggressive bets amid the uncertainty over the Fed's rate-hike path.

Market participants seem convinced that the US central bank will slow the pace of its policy tightening and have been pricing in a greater chance of a smaller 50 bps rate hike in December. That said, the incoming positive US macro data suggested that the economy remained resilient despite rising borrowing costs and fueled speculations that the Fed might lift rates more than recently projected.

Hence, the focus will remain glued to the FOMC monetary policy meeting on December 13-14, which will be followed by the Bank of England (BoE) meeting on Thursday. The UK central bank is expected to hike rates by 50 bps, though some analysts anticipate a larger 75 bps move. Nevertheless, the crucial central bank decisions should provide a fresh directional impetus to the GBP/USD pair.

In the meantime, a bleak outlook for the UK economy might hold back bulls from placing aggressive bets around the British pound amid absent relevant domestic macro data. The US economic docket, meanwhile, features the release of the usual Weekly Initial Jobless Claims. This, along with the US bond yields and the broader risk sentiment, will drive the USD and influence the GBP/USD pair.

Technical levels to watch