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Near the 1.2375 area, the GBP/USD pair halts its intraday decline and recovers over 40 pips from a three-day low reached earlier on Friday. Spot prices, however, remain in the red throughout the early North American session and are currently trading in the region between 1.2415 and 1.2420, down nearly 0.20 percent for the day.

Following disappointing UK macro releases, the British Pound weakens across the board, which, along with an intraday rise in the US Dollar (USD), exerts some downward pressure on the GBP/USD pair. In actuality, the UK Office for National Statistics reported that domestic Retail Sales decreased by 0.9% in March and sales excluding fuel fell by 1% during the same month, both of which fell short of consensus estimates. In addition, the flash UK Manufacturing PMI delivers a negative surprise and falls further into contraction territory to 46.6 in April, offsetting the better-than-anticipated rise in the Services PMI to 54.9.

On the other hand, the USD was initially supported by a growing consensus that the Federal Reserve (Fed) will continue to raise interest rates. This was viewed as a further factor impacting on the GBP/USD pair, although the intraday decline has halted in front of the strong horizontal support at 1.2350. Together, the persistent decline in US Treasury bond yields and the modest improvement in global risk sentiment operate as a headwind for the safe-haven Greenback. Aside from this, rising wagers on a further interest rate increase by the Bank of England (BoE) in May help limit losses for the major, at least for the time being.

Before positioning for a firm near-term direction, aggressive speculators should proceed with caution due to the aforementioned muddled fundamental backdrop. Now, market participants anticipate the release of preliminary US PMI prints. Along with the US bond yields and broader risk sentiment, this will impact the USD price dynamics and enable traders to capitalize on short-term opportunities in the GBP/USD pair.

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