GBP/USD surrenders modest intraday gains, seems vulnerable near multi-week low

• GBP/USD struggles to capitalize on its intraday move up and retreats to the 200-day SMA.
• The weaker-than-expected UK GDP print undermines the GBP and prompts fresh selling.
• Sliding US bond yields, a positive risk tone weigh on the USD and could help limit losses.
• Traders now look forward to the final US Q3 GDP report for some meaningful impetus.

The GBP/USD pair attracts fresh selling in the vicinity of mid-1.2100s on Thursday and retreats to the lower end of its daily range during the mid-European session. The pair is currently placed below the 1.2100 mark and remains well within the striking distance of a nearly three-week low touched on Wednesday, with bearish still awaiting a sustained break below a technically significant 200-day SMA.

The British Pound started losing ground following the release of the final UK GDP print, which showed that the economy contracted by 0.3% in the third quarter, worse than the previous estimate of 0.2%. Adding to this, the yearly growth rate was also revised down to 1.9% from the 2.4% reported previously and adds to a bleak outlook for the UK economy.

This comes on the back of a dovish outcome from the Bank of England (BoE) meeting last week and turns out to be a key factor acting as a headwind for the GBP/USD pair. It is worth recalling that two out of nine BoE MPC members voted to keep interest rates unchanged, suggesting that the central bank is closer to ending the current policy tightening cycle.

The downside for the GBP/USD pair, meanwhile, seems cushioned amid renewed US Dollar selling bias. Despite the Fed's hawkish commentary, investors expect the US central bank to pivot to something more neutral, which leads to a further decline in the US Treasury bond yields. This, along with a positive risk tone, is seen weighing on the safe-haven greenback.

The mixed fundamental backdrop makes it prudent to wait for some follow-through selling below the very important 200-day SMA before placing fresh bullish bets around the GBP/USD pair. Traders now look to the US economic docket, featuring the release of the final Q3 GDP print and Weekly Initial Jobless Claims later during the early North American session.

This, along with the US bond yields and the broader market risk sentiment, will influence the USD price dynamics and provide some impetus to the GBP/USD pair. The focus, however, will remain on the release of the US Core PCE Price Index (the Fed's preferred inflation gauge), due on Friday.

Technical levels to watch