GBPUSD remains depressed near daily low amid stronger USD, bears await break below 1.1800

• GBPUSD comes under fresh selling pressure on Monday amid some follow-through USD buying.
• China’s COVID-19 woes and geopolitical risks turn out to be key factors benefiting the greenback.
• A bleak outlook for the UK economy undermines the Sterling and contributes to the offered tone.

The GBPUSD pair kicks off the new week on a weaker note and remains under some selling pressure through the early European session. The pair is currently placed near the lower end of its daily trading range, though manages to hold its neck above the 1.1800 round-figure mark.

A combination of supporting factors assists the US Dollar to capitalize on last week's bounce from over a three-month low, which, in turn, exerts some downward pressure on the GBPUSD pair. The better-than-expected US Retail Sales released on Thursday cast doubts on the peak inflation narrative. Adding to this, hawkish signals from several Fed officials suggest that the US central bank is still far from pausing its policy-tightening cycle. This, along with the prevalent cautious market mood, is seen benefitting the safe-haven greenback.

The recent surge in COVID-19 cases in China and the imposition of fresh lockdowns in several financial hubs - including the capital Beijing and the economic centre Shanghai - fuel worries about a deeper global economic downturn. Furthermore, fears of a potential escalation in the Russia-Ukraine conflict temper investors' appetite for riskier assets and drive some haven flows towards the USD. The British Pound, on the other hand, is pressured by a bleak outlook for the UK economy, further contributing to the offered tone surrounding the GBPUSD pair.

In fact, the UK Office for Budget Responsibility (OBR) last week projected the UK GDP to slump by 1.4% next year as compared to a growth of 1.8% forecast in March. This overshadows expectations that the Bank of England will continue raising rates to combat stubbornly high inflation. The fundamental backdrop suggests that the path of least resistance for the GBPUSD pair is to the downside and supports prospects for an extension of the intraday downfall.

There isn't any major market-moving economic data due for release on Monday, either from the UK or the US, leaving the GBPUSD pair at the mercy of the USD price dynamics. Later during the North American session, traders might take cues from a scheduled speech by San Francisco Fed President Mary Daly. This, along with the broader risk sentiment, will influence the USD price dynamics and might allow traders to grab short-term opportunities around the major.

Technical levels to watch