• GBP/USD attracts some dip-buying on Friday amid a fresh leg down in the greenback.
• The softer US PCE report keeps the USD bulls on the defensive and acts as a tailwind.
• Traders seem reluctant ahead of Fed Chair Jerome Powell’s highly-anticipated speech.

The GBP/USD pair reverses an intraday slide to the 1.1775 region and refreshes the daily peak heading into the North American session, though lacks follow-through buying. Spot prices hold steady around the 1.1825-1.1830 region and move little in reaction to the US macro data.

The US Bureau of Economic Analysis reported that the headline Personal Consumption Expenditures (PCE) Index unexpectedly declined by 0.1% MoM in July as compared to the 1% increase in the previous month. Adding to this, The yearly rate drops to 6.3% during the reported month from 6.8% in June, missing estimates for a rise to 7.4%. Furthermore, the Core PCE Price Index - the Fed's preferred inflation gauge - also missed expectations and falls to a 4.6% YoY rate in July from the 4.9% previous.

The data points to signs of easing inflationary pressures in the US and exerts some pressure on the US dollar, offering support to the GBP/USD pair. That said, investors still seem convinced that the Fed will stick to its policy tightening path and hike interest rates further. The expectations remain supportive of elevated US Treasury bond yields, which seem to act as a tailwind for the greenback amid expectations for a hawkish message from Fed Chair Jerome Powell at the Jackson Hole Symposium.

Apart from this, a bleak outlook for the UK economy continues to undermine the sentiment surrounding the British pound. This further seems to contribute towards capping the upside for the GBP/USD pair, at least for the time being. Hence, it will be prudent to wait for strong follow-through buying before confirming that spot prices have bottomed out in the near term and positioning for any meaningful upside.

Technical levels to watch