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  • Slightly better-than-expected UK GDP print provided a modest lift to the GBP.
  • Persistent Brexit uncertainties/bullish USD kept a lid on any runaway rally.

The GBP/USD pair trimmed a part of its modest intraday gains and quickly retreated around 25-30 pips from daily tops, albeit showed some resilience below the 1.2300 handle.
 
Following a brief consolidation at the start of a new trading week, the pair gained some positive traction during the early European session in reaction to slightly better-than-expected UK GDP report for the second quarter of 2019. In fact, the final reading came in to show that the UK economy expanded at 1.3% yearly rate during April-June quarter as compared to 1.2% initially reported and provided a modest boost to the British Pound.

Brexit uncertainties capping gains

The uptick, however, lacked any strong bullish conviction amid persistent Brexit-related uncertainties. Given that the UK PM Boris Johnson remains firm to leave the EU on October 31, the fact that he might be looking for a way to circumvent the Benn Act around the Brexit delay seemed to be one of the key factors holding bulls from placing any aggressive bets and kept a lid on any strong follow-through up-move for the major.
 
On the other hand, the US Dollar remained well supported by a goodish pickup in the US Treasury bond yields and growing optimism over a possible resolution of the prolonged US-China trade disputes despite mixed headlines over the weekend. Reports on Friday indicated that the US Administration was looking to restrict capital flows into China and to limit Chinese companies from trading on the US exchanges, though the US Treasury officials denied any such plans.
 
The UK political/Brexit-related developments might continue to act as a key driver of the broader market sentiment surrounding the Sterling and it will now be interesting to see if the pair is able to capitalize on the positive momentum or runs out of the steam at higher levels amid a surprisingly dovish turn by a known BoE hawk Michael Saunders on Friday.

Technical levels to watch