• GBP/USD draws support from subdued USD demand, though bulls remain on the sidelines.
• Expectations for more aggressive BoE policy easing undermine the GBP and cap the major.
• Traders now look to the UK data dump for short-term impetus ahead of the US PPI report.

The GBP/USD pair struggles to capitalize on the previous day's modest bounce from the 1.3020 area or a one-month low and oscillates in a narrow band during the Asian session on Friday. Spot prices currently hover around mid-1.3000s, unchanged for the day, and seem vulnerable to prolonging the recent retracement slide from the highest level since March 2022 touched last month.

The US Initial Jobless Claims data released on Thursday pointed to signs of weakness in the US labor market and suggested that the Federal Reserve (Fed) will continue cutting interest rates. This keeps the US Dollar (USD) on the defensive below its highest level since mid-August and lends some support to the GBP/USD pair. That said, investors now seem to have fully priced out the possibility of a more aggressive policy easing by the Fed. The expectations were reaffirmed by the September FOMC meeting minutes and the stronger-than-expected US consumer inflation figures.

Apart from this, persistent geopolitical risks stemming from the ongoing conflicts in the Middle East act as a tailwind for the safe-haven Greenback and cap the upside for the GBP/USD pair. In the latest development, Israel's army said that it has killed the top commander of the Palestinian militant group Islamic Jihad in the Nur Shams refugee camp in the occupied West Bank. This, along with the market conviction that the Bank of England (BoE) might be heading towards speeding up its rate-cutting cycle, might continue to undermine the British Pound and keep a lid on the currency pair.