GBPUSD edges lower amid modest USD uptick, focus remains on UK Autumn Statement

• GBPUSD comes under some selling pressure amid a modest pickup in the USD demand.
• An uptick in the US bond yields and the cautious market mood benefits the greenback.
• The downside seems limited as traders keenly await the UK government’s financial plan.

The GBPUSD pair retreats sharply from the daily high and drops to the lower end of its intraday range, around the 1.1870 region during the first half of the European session.

The US Dollar gains some positive traction and reverses the previous day's modest losses, which turns out to be a key factor exerting some pressure on the GBPUSD pair. Wednesday's upbeat US Retail Sales data might have forced investors to scale back their bets for a less aggressive policy tightening by the Fed. This is evident from an uptick in the US Treasury bond yields, which, along with the cautious market mood, offers some support to the safe-haven greenback.

Investors now seem concerned that a new COVID-19 outbreak in China will further dent economic activity amid rapidly rising borrowing costs. Apart from this, persistent geopolitical tension takes its toll on the global risk sentiment. That said, growing acceptance that the Bank of England will continue raising borrowing costs to combat stubbornly high inflation could act as a tailwind for the Sterling. This, in turn, should help limit any deeper losses for the GBPUSD pair.

Traders might also prefer to wait for the UK government's financial plan before placing aggressive bets and positioning for a firm near-term direction. Chancellor Jeremy Hunt will unveil his Autumn Statement later today and is expected to reduce the size of the fiscal gap. This will play a key role in driving the sentiment surrounding the British Pound. Apart from this, traders will take cues from the US macro data to grab short-term opportunities around the GBPUSD pair.

Thursday's US economic docket features the release of the Philly Fed Manufacturing Index and the usual Weekly Initial Jobless Claims later during the early North American session. This, along with speeches by a slew of FOMC members and the broader market risk sentiment, will influence the USD price dynamics and provide some meaningful impetus to the GBPUSD pair.

Technical levels to watch