GBP/USD refreshes YTD lows and rebounds, keeps the red below 1.3400

• GBP/USD witnessed some selling on Thursday and dropped to fresh YTD lows.
• Disappointing UK macro data, Brexit jitters acted as a headwind for the GBP.
• Sustained USD selling further collaborated to the slide below the 1.3400 mark.

The GBP/USD pair dropped to the lowest level since December 2020 during the early part of the European session, albeit quickly recovered a few pips thereafter. The pair was last seen trading with only modest intraday losses, just below the 1.3400 mark.

The pair struggled to capitalize on its attempted recovery move on Thursday, instead met with some fresh supply near the 1.3430-35 region in reaction to disappointing UK macro data. The Preliminary UK GDP report or the first estimate showed that the economy expanded by 1.3% during the July-September period. This marked a sharp deceleration from the 5.5% growth reported in the previous quarter and was worse than 1.5% anticipated.

Adding to this, the UK Manufacturing and Industrial production figures also fell short of consensus estimates. This comes on the back of Worries that the UK government will trigger Article 16 of the Northern Ireland Protocol and the Bank of England's dovish decision last week. The combination of factors acted as a headwind for the British pound, which along with sustained US dollar buying dragged the GBP/USD pair lower.

The US CPI report released on Wednesday showed that consumer prices in October rose at the fastest annual pace since 1990. This, in turn, reinforced expectations about an early policy tightening by the Fed and continued acting as a tailwind for the greenback. In fact, the key USD Index shot to fresh YTD tops and was further supported by the overnight massive rally in the US Treasury bond yields.

Meanwhile, the latest leg of a sudden fall over the past hour or so could further be attributed to some technical selling below the 1.3400 round-figure mark, confirming a fresh bearish breakdown. That said, oversold RSI on intraday charts assisted the GBP/USD pair to quickly recover around 25-30 pips from daily swing lows. That said, the bias remains tilted in favour of bearish traders and any move up would be seen as a selling opportunity.

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