• GBPUSD kicks off the new week on a softer note amid a goodish pickup in the USD demand.
• Hawkish remarks by Fed’s Waller push the US bond yields higher and underpins the greenback.
• A bleak outlook for the UK economy weighs on the Sterling and contributes to capping gains.
• Chancellor Jeremy Hunt will now play a key role in determining the near-term trend for GBPUSD.

The GBPUSD pair struggles to capitalize on last week's breakout momentum beyond the 100-day SMA barrier and kicks off the new week on a softer note. The pair remains on the defensive through the first half of the European session and is currently trading just above mid-1.1700s amid resurgent US Dollar demand. The downside, however, remains cushioned as the focus remains glued to this week's key macro data and event risk from the UK.

Hawkish remarks by Fed's Waller revive USD demand

The US Dollar stages a goodish recovery from its lowest level since mid-August set in the aftermath of softer US consumer inflation figures last week and acts as a headwind for the GBPUSD pair. The US Treasury bond yields edge up in reaction to more hawkish remarks by Fed Governor Christopher Waller on Sunday. During a conversation in Sydney, Australia, Waller said that the US central bank was not softening its fight against inflation. This, along with a softer tone around the equity markets, is seen offering some support to the safe-haven greenback.

Gloomy outlook for the UK economy weighs on Sterling

Apart from this, the worsening outlook for the UK economy continues to undermine the British Pound and further contributes to capping the upside for the GBPUSD pair. In fact, the National Institute of Economic and Social Research (NIESR) warned that there is a significant risk of a deeper economic downturn in 2023. The think tank now forecasts flat GDP in Q4, with an elevated risk of a contraction, and a fall in the first three months of 2023. This, in turn, is holding back traders from placing aggressive bullish bets and capping the upside for the GBPUSD pair.

Focus remains on Chancellor Hunt's Autumn Statement

Despite the aforementioned negative factors, market participants prefer to wait on the sidelines ahead of key domestic data - the monthly employment details on Tuesday and the CPI report on Wednesday. The big event for the Sterling, meanwhile, comes on Thursday when Chancellor Jeremy Hunt lays out his fiscal plans. After being warned by the UK Office for Budget Responsibility about a larger-than-estimated government borrowing, Hunt is planning a big package of spending cuts and tax increases. This could further act as a headwind for the Sterling and the GBPUSD pair.

Technical Outlook

From a technical perspective, last week's sustained move and acceptance above the 100-day SMA for the first time since February could be seen as a fresh trigger for bullish traders. That said, failure near the top end of a one-and-half-month-old ascending channel warrants caution. This makes it prudent to wait for some follow-through buying beyond the said barrier, currently around the 1.1850-1.1860 region, before positioning for any further gains.

Conversely, any meaningful pullback towards the 1.1700 round-figure mark might still be seen as a buying opportunity. This, in turn, should limit the downside for the GBPUSD pair near the 100-day SMA resistance breakpoint, now turned support, currently around the 1.1670-65 region.