GBP/USD off lows, still deep in the red below 1.2100 handle

• Dismal UK GDP growth figures prompted some aggressive selling on Friday.
• Technical selling below 1.2100 handle aggravated the intraday bearish slide.
• Oversold conditions seemed to be the only factor that helped limit losses. 

The GBP/USD pair maintained its heavily offered tone through the early North-American session, albeit has managed to recover around 20-25 pips from daily lows.

Softer UK GDP print exerted some heavy pressure

The pair came under some intense selling pressure on the last trading day of the week and tumbled to an intraday low level of 1.2056 - the lowest since January 2017 - in reaction to dismal UK macro releases. Data released on Friday showed that the economy unexpectedly contracted by 0.2% during the second quarter of 2019 - for the first time since 2012.
 
The downward trajectory seemed rather unaffected by a subdued US Dollar demand, which remained on the defensive following the release of softer-than-expected US Producer Price Index (PPI), and took along some short-term trading stops placed near the 1.2100 handle and the previous multi-month swing lows - around the 1.2080 region.
 
The pair, however, managed to find some support at lower levels and has now bounced back to the 1.2080 region. The intraday bounce lacked any obvious fundamental catalyst and could be solely attributed to some near-term short-covering move, which runs the risk of fizzling out rather quickly amid persistent fears of a no-deal Brexit.
 
Hence, it will be prudent to wait for a strong follow-through buying interest in order to confirm that the pair might have bottomed out in the near-term and before traders start positioning for a further near-term corrective rally, possibly back above the 1.2100 round figure mark.

Technical levels to watch