GBP/USD remains confined in a narrow band below mid-1.3100s, NFP awaited

• GBP/USD oscillated in a narrow trading band for the second successive day on Friday.
• Hawkish Fed expectations underpinned the USD and capped the upside for the major.
• Investors, however, preferred to wait on the sidelines ahead of the key US jobs report.

The GBP/USD pair lacked any firm directional bias and seesawed between tepid gains/minor losses, below the mid-1.3100s through the early European session.

The pair, so far, has struggled to capitalize on this week's goodish rebound from mid-1.3000s and extended its sideways/consolidative price move for the second successive day on Friday. The British pound drew some support from Thursday's better-than-expected release of the final UK GPD print, which showed that the economy expanded by 1.3% in Q4 2021 as against the 1.0% estimated. That said, the Bank of England's sofer tone over the need for further interest rate hikes, along with a broad-based US dollar strength, kept a lid on any meaningful gains for the GBP/USD pair.

In fact, the USD built on the previous day's solid rebound from a nearly two-week low and drew some support from fading hopes for a de-escalation in the Ukraine war. Apart from this, expectations that the Fed would adopt a more aggressive policy stance to combat stubbornly high inflation acted as a tailwind for the buck. In fact, the markets have been pricing in an almost 100 bps rate hike over the next two policy meetings and the bets were reinforced by the US Core PCE Price Index released the previous day, which rose to 5.4% YoY in February from the 5.2% previous.

The fundamental backdrop seems tilted in favour of the USD bulls, though investors seemed reluctant to place aggressive bets and preferred to wait on the sidelines ahead of the US monthly jobs data. The popularly known NFP report, due for release later during the early North American session, will influence the Fed's monetary policy outlook. Apart from this, developments surrounding the Russia-Ukraine saga will drive the USD and provide a fresh impetus to the GBP/USD pair.

Technical levels to watch