GBPUSD holds steady near mid-1.1700s, highest since late August amid sustained USD selling

• GBPUSD edges higher to its highest level since late August, albeit lacks follow-through.
• The heavily offered tone surrounding the USD is seen as a key factor offering support.
• A bleak outlook for the UK economy is holding back bulls from placing aggressive bets.

The GBPUSD pair attracts some buying near the 1.1650-1.1645 region on Friday and climbs to its highest level since late August during the first half of the European session. The pair is currently trading around the mid-1.1700s and is looking to build on the previous day's post-US CPI strong bullish momentum beyond the 100-day SMA.

The US Dollar (USD) selling remains unabated amid firming expectations that the Fed will slow the pace of its policy tightening. In fact, the USD Index, which measures the greenback's performance against a basket of currencies, drops to a two-and-half-month low and turns out to be a key factor acting as a tailwind for the GBPUSD pair.

The British Pound, on the other hand, draws some support from mostly upbeat UK economic data released earlier this Friday. The UK Office for National Statistics reported this Friday that the domestic economy contracted by 0.6% in September against -0.4% expected and the previous month's upwardly revised reading of -0.1%.

Furthermore, the quarterly GDP print, the yearly growth rate, along with the Manufacturing and Industrial production, came in better than market expectations and offers additional support to the GBPUSD pair. Spot prices, however, lack follow-through buying amid a gloomy outlook for the UK economy, which is holding back bulls from placing fresh bets.

It is worth recalling that the Bank of England (BoE) warned last week that a recession in the UK could last for all of 2023 and the first half of 2024. This, in turn, warrants caution before positioning for any further near-term appreciating move. Traders now look to the Preliminary Michigan US Consumer Sentiment Index for a fresh impetus.

Technical levels to watch