GBP/USD off lows, still on the defensive below mid-1.3000s post-UK macro data

• GBP/USD remained depressed for the second consecutive session amid stronger greenback.
• Wednesday’s mostly upbeat UK data extended some support and helped limit the downside.
• Investors now look forward to the US consumer inflation figures for a fresh trading impetus.

The GBP/USD pair maintained its offered tone below mid-1.3000s and had a muted reaction to the latest UK macro data.

The pair extended the previous day’s intraday retracement slide of around 90 pips and remained depressed for the second consecutive session on Wednesday. The downtick was exclusively sponsored by some follow-through buying around the US dollar, with bulls largely shrugging off slightly better-than-expected UK GDP report.

The preliminary reading of the second quarter of 2020 UK GDP came in at -20.4% QoQ vs. -20.5% expected and -2.2% previous. On an annualized basis the figure stood at -21.7% vs. -22.4% expected and the -1.7% previous. Meanwhile, the UK economy recorded a strong growth of +8.7% in June as compared to +8.0% expected and +1.8% in May.

On the other hand, a decline in COVID-19 hospitalizations in the US strengthens investors’ confidence that the pandemic was coming back under control in response to more restrictive measures. Adding to this, a strong pickup in the US Treasury bond yields pointed to the improving prospects for the US economic recovery, which, in turn, underpinned the greenback.

It will now be interesting to see if the GBP/USD pair is able to gain any meaningful traction or remains confined well within a one-week-old trading range. Later during the early North American session, the US consumer inflation figures might influence the USD price dynamics and produce some meaningful trading opportunities.

Technical levels to watch