GBP/USD recovers modest intraday losses, steady above mid-1.2100 as traders await NFP

• GBP/USD attracts some dip-buying on Friday, though lacks bullish conviction.
• The BoE’s bleak economic outlook continues to act as a headwind for sterling.
• Modest USD strength also contributes to capping ahead of the US NFP report.

The GBP/USD pair reverses modest intraday losses and climbs back closer to the daily high during the early European session. The pair is currently trading just above the mid-1.2100s and might now be looking to build on the overnight bounce from the weekly low touched in reaction to the Bank of England's bleak economic outlook.

In fact, the UK central bank warned that a recession will begin in the fourth quarter and the economic downturn could last five quarters. Adding to this, the BoE said that the monetary policy is not on a pre-set path, suggesting that it might slow down the pace of the policy tightening. That said, the lack of any meaningful buying around the US dollar offers some support to the GBP/USD pair.

Despite more hawkish remarks by several Fed officials this week, investors have been pushing back against the idea of a larger interest rate hike at the September FOMC meeting. Apart from this, a positive tone around the equity markets undermines the safe-haven buck and assists the GBP/USD pair to attract some buying near the 1.2130 area, though the uptick lacks follow-through.

Traders now seem reluctant to place aggressive bets and prefer to wait on the sidelines ahead of the closely-watched US monthly jobs data, due later during the early North American session. The popularly known NFP report is expected to show that the economy added 250K jobs in July, down sharply from 372K in the previous month, and the unemployment rate remained steady at 3.6%.

Apart from this, investors will take cues from Average Hourly Earnings growth data. This will play a key role in influencing the near-term USD price dynamics and help determine the next leg of a directional move for the GBP/USD pair. In the meantime, spot prices seem more likely to remain confined in a range below the 1.2200-1.2210 strong resistance zone.

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