GBP/USD loses momentum below 1.2950 on downbeat UK GDP data

• GBP/USD drifts lower to near 1.2925 in Friday's early European session. 
• The UK GDP declined 0.1% MoM in January, weaker than expected. 
• Traders raise their bets that the Fed will restart its rate cuts in June.

The GBP/USD pair loses ground to near 1.2925 during the early European session on Friday. The Pound Sterling (GBP) edges lower after the release of UK growth numbers. The attention will shift to the preliminary Michigan Consumer Sentiment for March, which will be published later on Friday. 

Data released by the Office for National Statistics (ONS) showed on Friday that the UK economy contracted 0.1% over the month in January. The reading missed the estimation of 0.1% growth in the reported period. Meanwhile, UK Industrial Production declined 0.9% MoM in January versus 0.5% prior, below the market consensus of -0.1%. The GBP attracts some sellers in an immediate reaction to the downbeat UK GDP data. 

The Bank of England (BoE) is expected to hold interest rates steady at the next Monetary Policy Committee meeting next week as most policymakers have guided a 'gradual and cautious' policy-easing approach. That would leave the base rate unchanged at 4.5%.  In the February meeting, the UK central bank decided to reduce its interest rates by 25 basis points (bps) amid concerns over growth prospects.

The softer US consumer and producer inflationary pressures could pave the way for the Federal Reserve (Fed) to cut interest rates in the June policy meeting, which might help limit the pair's losses. Previously, Barclays projected a single 25 basis points (bps) cut in June. Short-term interest-rate futures have priced in nearly 75% odds of a quarter-point reduction to the Fed's policy rate by June, according to the CME FedWatch tool.