The chart reads similar to the price action that we saw yesterday as pointed out here. Buyers attempted to try and breach the key trendline resistance (white line) but are failing at that for the time being. The key level is now seen at 1.2217 and that is helping to limit gains ahead of the weekend break.
Dollar sentiment is more mixed today but that is perhaps a welcome development for the greenback after some weakness following the slightly softer US CPI data on Wednesday. The pound itself hasn't been performing too well with it even trailing the dollar already in trading yesterday and is looking softer again today.
There was initial spike from 1.2190 to 1.2215 earlier after the UK Q2 GDP release but it has fallen back now to 1.2175, holding at session lows. As much as the data earlier wasn't as bad as expected, it still points to the UK economy contracting in Q2 and with economic conditions looking rather lackluster amid the worsening cost-of-living crisis, there isn't much comfort towards the year-end with the BOE having also forecast a recession to hit starting next year.
From a fundamental outlook, that isn't too optimistic for the pound as the trade outlook for GBP/USD now turns into a battle between the BOE pivot and the Fed pivot. The latter is stealing the spotlight this week but if anything else, one might expect the former to come into focus much faster and that will start to weigh on the pound more heavily.
I reckon this will be one trade worth watching as the structural view supports a material move lower in cable and it will come down to picking a nice spot when it comes to shorting the pair.
