GBP/USD Holds 1.3440 as UK GDP Beats Forecast, Fed Cut Bets Lift Pound
During Thursday’s European session, the British pound (GBP/USD) stabilized around 1.3440 after stronger-than-expected UK data...
Quick overview
- The British pound stabilized around 1.3440 after positive UK economic data, including a 0.1% GDP growth in August.
- Industrial production and manufacturing output exceeded expectations, contributing to a sense of economic resilience despite some declines in construction output.
- The U.S. dollar remains weak due to expectations of Federal Reserve rate cuts, benefiting risk-sensitive currencies like the pound.
- Technically, GBP/USD shows bullish momentum with key support levels, but is nearing overbought conditions, suggesting a potential pause in upward movement.
During Thursday’s European session, the British pound (GBP/USD) stabilized around 1.3440 after stronger-than-expected UK data boosted confidence in the economy. According to the latest Office for National Statistics report, UK GDP grew 0.1% month-on-month in August, matching forecasts but reversing the 0.1% decline seen previously.
Supporting figures were equally encouraging, industrial production rose 0.4%, while manufacturing output jumped 0.7%, both exceeding expectations of 0.2%. Although construction output slipped 0.3%, and the goods trade deficit widened slightly to £21.2 billion, the overall data tone suggests modest economic resilience.
Traders see these numbers as evidence that the UK economy is maintaining momentum despite persistent inflationary pressures, giving the pound a near-term lift.
Dollar Weakness Adds Tailwind
The U.S. dollar continues to trade defensively amid growing expectations of two additional Federal Reserve rate cuts before year-end. The lack of fresh inflation and employment data due to the U.S. government shutdown has reinforced the dovish outlook, pushing investors toward higher-yielding or risk-sensitive currencies like the pound.
This broader dollar softness, combined with encouraging UK data, has helped GBP/USD sustain gains near recent highs, while traders await remarks from Fed officials for additional cues.
GBP/USD Technical Outlook and Trade Setup
On the technical side, GBP/USD remains within a well-defined ascending channel on the hourly chart, trading near 1.3440. The 20-EMA (1.3410) has crossed above the 50-EMA (1.3378), signaling firm bullish momentum. The pair’s higher highs and higher lows structure confirms short-term upside bias.
However, with the RSI hovering around 68, the pair is nearing overbought territory, suggesting a possible pause or shallow retracement before the next push higher. Sustained support above 1.3410 keeps focus on 1.3488 and 1.3529 resistance levels. A break below 1.3370 could trigger short-term profit-taking toward 1.3350–1.3300.
Trade Idea:
- Buy above: 1.3410
- Targets: 1.3480 – 1.3520
- Stop-loss: Below 1.3370
As long as GBP/USD holds above its EMA support levels and channel trendline, the broader bias stays bullish, favoring dip-buying strategies into strength.
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