• UK economy expanded by 0.3% in May, trade deficit unexpectedly shrinks to £11.542 billion.
• The positive readings were partly offset by softer UK manufacturing/industrial output figures.
• The focus now shifts to the Fed Chair Jerome Powell’s testimony and FOMC meeting minutes.

The GBP/USD pair refreshed session tops, around the 1.2475-80 region, though lacked any strong follow-through post-mixed UK macro releases.

The pair quickly reversed an early dip back closer to multi-month lows and regained some positive traction, supported by a modest US Dollar pullback from three-week tops. The uptick remained supported by the UK monthly GDP print, showing that the economy expanded 0.3% in May.

Adding to this, the UK goods trade deficit unexpectedly shrank to £11.542 billion in May as compared to an upwardly revised £12.761 deficit recorded in the previous month, albeit was partly offset by a slight disappointment from the UK industrial and manufacturing production figures.

This coupled with persistent fears of a no-deal Brexit might hold investors from buying the British Pound and keep a lid on any meaningful recovery. Given the subdued reaction, the recovery could be solely attributed to some short-covering move amid extremely near-term oversold conditions.

Moving ahead, the Fed Chair Jerome Powell's highly anticipated congressional testimony, followed by the release of June FOMC meeting minutes will influence the USD price dynamics and produce some short-term trading opportunities later during the North-American session.

Technical levels to watch