GBP/USD grinds higher past 1.2100 ahead of UK/US GDP

• GBP/USD recovers from three-week low amid broad US Dollar pullback.
• Upbeat UK CBI Retail Sales favor bulls but British medical worker’s strike probe Cable bulls.
• Softer Treasury yields, mixed US data probe USD ahead of US Q3 GDP.
• UK’s Q3 GDP is expected to confirm 0.20% QoQ contraction.

GBP/USD prints mild gains around 1.2110 as it pares the previous day’s losses ahead of the third quarter (Q3) Gross Domestic Product (GDP) details of the UK and the US.

The Cable pair dropped to the lowest levels in three weeks the previous day amid a broad US Dollar rebound. However, mixed updates and a retreat in the Treasury bond yields seemed to have weighed on the quote of late. On the contrary, upbeat prints of the British data lure pair buyers ahead of the key statistics.

That said, the UK’s Confederation of British Industry (CBI) reported on Wednesday that the Retail Sales Balance in December rose to +11 from -19 in November. Also, the CBI's Expected Retail Sales for January came in at -17.

On the negative side, Reuters came out with the news saying, “Thousands of ambulance workers in England and Wales walked out over pay on Wednesday, increasing the strain on a state-funded health service a day after nurses went on strike, as government ministers advised the public to avoid taking risks.”

It should be noted that the US 10-year Treasury bond yields remain depressed near 3.65% after retreating from the monthly high of 3.72% the previous day. On the other hand, the US two-year bond coupons also drop to around 4.21% after a two-day downtrend.

On Wednesday, the US Conference Board’s (CB) Consumer Confidence jumped to the eight-month high of 108.3 for December, compared to the market forecasts of 101.0 and the revised prior readings of 101.40. However, the US Existing Home Sales for November, 4.09M MoM compared to 4.2M expected and 4.43M prior.

To sum up, the pre-data anxiety joins mixed clues from geopolitics to propel GBP/USD prices. Ukrainian President Volodymyr Zelensky’s US visit and Russian President Vladimir Putin’s readiness to increase the country’s military potential challenge the risk appetite. On the other hand, China’s readiness for more stimulus and the Bank of Japan’s (BOJ) second unscheduled bond buying allow US stock future to remain mildly bid at the latest.

Moving on, the UK Q3 GDP, expected to confirm 0.2% QoQ contraction, could recall the GBP/USD bears if marching downbeat forecasts or providing a negative surprise. On the other hand, the US GDP is expected to confirm 2.9% Annualized growth in Q3 while the Core PCE is anticipated to also meet the initial forecasts of 4.6% QoQ during the stated period.

Technical analysis

A clear bounce off the 200-DMA and an upward-sloping support line from late September, around 1.2080 by the press time, keeps GBP/USD buyers hopeful to revisit the monthly high surrounding 1.2450.