GBP/USD muted reaction to upbeat US GDP

The GBP/USD pair had a muted reaction to the preliminary release of US Q3 GDP print but maintained its bearish bias below mid-1.2100s.

The US economy recorded a strong growth during the third quarter of 2016 and expanded at 2.9% annualized pace marking the fastest growth rate in two and a half years. Market expectations were pointing to an annualized growth of 2.5% for the quarter. 

Upbeat growth numbers lifted market expectations of an eventual Fed rate-hike action by the end of this year, with CME group's FedWatch Tool now pointing to 75.3% probability of such an action in December. Growing expectations of Fed action provided a minor boosted to the overall US Dollar Index and exerted some selling pressure around the GBP/USD pair, which maintained its offered tone amid ongoing worries over the economic consequences of the historic Brexit vote. 

Further downslide, however, was limited and the pair remained stuck around 1.2140-50 region as market participants seemed reluctant to add on to their bullish US Dollar bets ahead of a weekend. 

Later during NY session, the release of revised UoM Consumer Sentiment for October would now be looked upon for fresh impetus and short-term trading opportunities. 

Technical levels to watch

From current levels, session low near 1.2120 seems to act as immediate support below which the pair is likely to accelerate the slide immediately towards weekly lows support near 1.2080 level before eventually dropping to flash-crash swing lows support near 1.2000 psychological mark. 

Meanwhile, on the upside, any recovery attempts above 1.2160 level might now confront strong resistance near 1.2175, which if cleared should lift the pair back above 1.2200 handle towards testing its next major resistance near 1.2250 area.