GBP/USD rebound fades around 1.1900, UK data dump, US inflation eyed

• GBP/USD struggles to cheer softer USD on UK fundamentals, retreats from intraday high.
• Shortcomings in British strategies to cope-up with economic challenges, political jitters to weigh on the cable.
• UK’s prints of trade and production numbers could offer immediate directions.
• US CPI for June will be crucial amid fears of recession, hawkish Fed bets.

GBP/USD retreats to 1.1900 amid the market’s anxiety ahead of the key UK/US data. Even so, the cable pair snaps a two-day downtrend while staying above a two-year low, marked the previous day, heading into Wednesday’s London open.

Mildly positive market sentiment underpinned the US dollar’s pullback and favored the GBP/USD to consolidate losses around a multi-month low earlier in Asia. The reason for the mildly positive sentiment could be linked to the upbeat White House (WH) statement and softer US data.

As per Reuters, “The US economic data, including the June jobs report, are not consistent with a recession in the first or second quarters,” the White House said in a memo released on Tuesday. The news contributed to the market’s profit booking moves ahead of the key data/events. Further, the US NFIB Business Optimism Index for June slumped to the lowest since early 2013 while flashing 89.5 figures versus 93.1 prior.

At home, the Financial Times (FT) marks a lack of strategies to hint at pessimism surrounding the UK. “The UK needs a coherent long-term economic strategy that underpins robust growth in national output, following years of inconsistency from ministers, according to three reports published on Wednesday,” said the news. The update mentioned Resolution Foundation, Treasury select committee and National Audit Office as the key reports for favoring the conclusion.

Elsewhere, ex-Chancellor of the UK Rishi Sunak appears to follow the renowned leader Margret Thatcher to aim for economic recovery, if he is elected as the Prime Minister (PM). “Tax cuts will follow in time but the Tory leadership contender tells The Telegraph that tackling the ‘enemy’ that is inflation is key,” per the news conveyed by Reuters.

Amid these plays, the US Dollar Index (DXY) struggles around a 20-year high while S&P 500 Futures and the US 10-year Treasury yields both snap a two-day downtrend. Further, stocks in the Asia-Pacific region also appear to fade the previous bearish bias.

Looking forward, an anticipated recovery in the UK’s monthly Gross Domestic Product (GDP) for May, expected 0.0% versus -0.3% prior, could join the likely improvement in the MoM readings of the Manufacturing Production and Industrial to favor GBP/USD bulls. However, any disappointment from the data won’t hesitate to recall sellers.

Following that, the US Consumer Price Index (CPI) for June, expected to rise to 8.8% YoY from 8.6%, will be crucial for the pair traders to watch.

Technical analysis

GBP/USD stays inside a three-week-old bearish channel formation amid downbeat RSI conditions. That said, the quote’s latest weakness eyes the recently flashed multi-month low near 1.1810. Following that, the 1.1800 threshold and the lower line of the stated channel, around 1.1740 by the press time, could lure the pair bears.

On the flip side, recovery remains elusive until the quote remains inside the stated channel. That said, the 50-SMA level of 1.1990 acts as an extra filter to the north, other than the stated channel’s resistance line near 1.1960.