GBP/USD surrenders intraday gains, holds above 1.1800 as traders await US macro data

• GBP/USD failed to preserve its modest intraday gains despite subdued USD price action.
• The overnight less hawkish remarks by Fed officials kept the USD bulls on the defensive.
• Recession fears acted as a tailwind for the USD and capped the upside for the major.
• Traders now look forward to key US macro releases for some meaningful opportunities.

The GBP/USD pair struggled to capitalize on its modest intraday gains and attracted some selling near the 1.1850 region on Friday. The pair retreated to the lower end of its daily range during the early European session and was last seen trading just above the 1.1800 mark.

Fed Governor Christopher Waller and St. Louis Fed President Jim Bullard - the biggest Fed hawks - tried to push back against market bets for a 100 bps rate hike move later this month. In fact, the implied odds for a supersized increase on July 27 have fallen drastically. This was evident from a further decline in the US Treasury bond yields, which kept the US dollar bulls on the defensive and offered some support to the GBP/USD pair.

The uptick, however, lacked bullish conviction amid growing recession fears, which continued weighing on investors' sentiment and acted as a tailwind for the safe-haven greenback. Apart from this, the UK political uncertainty, along with Brexit woes, overshadowed the prospects for a further tightening by the Bank of England and undermined the British pound. The combination of factors contributed to cap gains for the GBP/USD pair.

The fundamental backdrop supports prospects for additional losses, through bearish traders seemed reluctant to place aggressive bets around the GBP/USD pair ahead of the key US macro data. Friday's US economic docket features the release of the Empire State Manufacturing Index, Industrial Production and Michigan Consumer Sentiment Index.

Apart from this, Atlanta Fed President Raphael Bostic's speech and the US bond yields will influence the USD price dynamics. Traders will further take cues from the broader market risk sentiment to grab short-term opportunities around the GBP/USD pair on the last day of the week.

Technical levels to watch