• GBP/USD staged modest recovery from the lowest level since November 2020 touched on Friday.
• Stability in the equity markets, retreating US bond yields undermined the USD and extended support.
• Mostly upbeat UK macro data failed to impress bulls amid worries about the Russia-Ukraine conflict.

The GBP/USD pair traded with a mild positive bias through the early European session and might now be looking to build on the intraday gains beyond the 1.3100 round-figure mark.

The pair reversed an early dip to the 1.3070-1.3065 area, or the lowest level since November 2020, though the uptick lacked bullish conviction or strong follow-through buying. Signs of stability in the equity markets, along with modest pullback in the US Treasury bond yields kept the US dollar bulls on the defensive. This, in turn, was seen as a key factor that assisted the GBP/USD pair to attract some buying on the last day of the week.

The British pound drew additional support from better-than-expected UK monthly GDP report, which came in to show that the economy expanded by 0.8% in January as against 0.2% anticipated. Adding to this, Industrial and Manufacturing Production recorded a monthly growth of 0.7% and 0.8%, respectively, both surpassing expectations. The data reaffirm expectations that the Bank of England will go ahead and hike interest rates at the upcoming meeting.

That said, growing market worries about the worsening situation in Ukraine and the risk of a further escalation in the conflict between Russia and Western powers capped any optimistic move in the markets. This, along with Thursday's strong US CPI print, acted as a tailwind for the greenback and kept a lid on any meaningful recovery for the GBP/USD pair. Hence, it will be prudent to wait for some follow-through buying before placing fresh bullish bets.

Technical levels to watch