GBP/USD struggles for a firm intraday direction, hovers around 1.2400 ahead of US GDP

• GBP/USD remains confined in a narrow trading band heading into the North American session.
• A combination of factors helps revive the USD demand and acts as a headwind for the major.
• The downside seems limited as traders prefer to wait for the release of the US Q4 GDP report.

The GBP/USD pair continues with its struggle to gain any meaningful traction and extends its rangebound price action heaving into the North American session. The pair is currently placed just below the 1.2400 mark, awaiting a fresh catalyst before the next leg of a directional move.

Traders now seem to have moved to the sidelines and look to the first estimate of the fourth quarter US GDP report for a fresh impetus. In the meantime, an intraday pickup in the US Treasury bond yields and a softer risk tone assist the safe-haven US Dollar to stage a modest recovery from an eight-month low. This, in turn, acts as a headwind for the GBP/USD pair, though the downside seems cushioned, at least for the time being.

Rising bets for a smaller 25 bps Fed rate hike move in February should keep a lid on any meaningful upside for the US bond yields and hold back the USD bulls from placing aggressive bets. Furthermore, speculations that elevated consumer inflation will force the Bank of England (BoE) to continue lifting rates should offer some support to the British Pound. This supports prospects for some meaningful upside for the GBP/USD pair.

Traders, however, seem reluctant ahead of the key US macro releases - the Advance Q4 GDP print, Durable Goods Orders and New Home Sales data. The focus will then shift to the US Core PCE Price Index, due on Friday, which will play a key role in influencing the Fed's rate-hike path. This, in turn, will drive the USD demand and determine the near-term trajectory for the GBP/USD pair ahead of next week's crucial central bank event risks.

Technical levels to watch