GBP/USD: Down a few pips below 1.2500 on unimpressive UK statistics

• GBP/USD takes offers to refresh intraday low, extends early-day pullback from one-week high.
• UK GDP growth drops to 0.0%, Industrial Production MoM also eased in February.
• US Dollar traces yields to bounce off 10-week-old support.
• More US inflation clues, central bank talks and Brexit updates eyed for fresh impulse.

GBP/USD renews its intraday low near 1.2480 as the UK’s data dump for February marks mostly downbeat numbers during early Thursday in London. Adding strength to the Cable pair’s pullback moves could be the US Dollar’s corrective bounce amid a sluggish session and a light calendar.

UK’s February 2023 Gross Domestic Product (GDP) eased to 0.0% versus 0.1% expected and 0.4% prior while the Industrial Production improved on YoY but declined on MoM during the stated month. Further details suggest an increase in the UK’s trade deficit and no change in the Index of Services.

Also read: UK GDP arrives at 0% MoM in February vs. 0.1% expected

Apart from the UK data, the chatters surrounding no imminent UK-US trade deal, despite Rishi Sunak’s ability to strike a Brexit agreement with the European Union, seem to exert downside pressure on the GBP/USD prices. Furthermore, fears of easing inflation, as signaled by Bank of England (BoE) Governor Andrew Bailey, also allow the quote to pare recent gains.

On the other hand, the US Dollar Index (DXY) bounces off a 2.5-month-old support line, up 0.07% near 101.60 by the press time. With this, the greenback’s gauge versus six major currencies traces the Treasury bond yields. That said, the US 10-year and two-year Treasury bond yields print mild gains around 3.41% and 3.98% respectively. That said, the US 10-year Treasury bond yields snapped a three-day uptrend with mild losses to around 3.40% while the two-year counterpart also eased to 3.96% by marking the first daily negative in five.

It’s worth mentioning that the DXY dropped the most in three weeks the previous amid downbeat US inflation data and the Federal Reserve (Fed) officials’ downbeat comments and uninspiring FOMC Minute.

Having witnessed the initial reaction to the UK data dump for February, the GBP/USD pair traders may witness a lackluster day ahead amid an absence of major data/events, which in turn highlights risk catalysts as the factors to watch for clear directions. Even so, today’s US Producer Price Index (PPI) for March and Friday’s preliminary readings of the Michigan Consumer Sentiment Index for April can entertain the Cable pair traders.

Technical analysis

The latest pullback remains elusive unless GBP/USD slips beneath the previous key horizontal resistance comprising levels marked since December 2022, around 1.2450-45. Even so, a three-week-old ascending support line, near 1.2385 at the latest, can test the intraday bears. Alternatively, May 2022 top, surrounding 1.2665, remains on the Cable buyer’s radar.