GBP/USD Slips Below $1.34 as Traders Brace for UK GDP and BoE Rate Cut Risk
GBP/USD slipped during the European session, easing below the $1.3400 region as traders turned cautious ahead of a busy stretch of UK...
Quick overview
- GBP/USD fell below $1.3400 as traders await key UK economic data, including GDP and CPI reports.
- The upcoming GDP report is anticipated to show a slight rebound, which could bolster UK economic outlook.
- Expectations of a 25-bps rate cut by the BoE are limiting GBP's potential upside despite a weaker US Dollar.
- Technical analysis indicates support at $1.3351, with resistance at $1.3391, while momentum remains positive.
GBP/USD slipped during the European session, easing below the $1.3400 region as traders turned cautious ahead of a busy stretch of UK economic releases. Markets are preparing for monthly GDP, labour market figures, and November’s CPI — all due over the next week.
The immediate focus is Friday’s GDP report, expected to show a mild 0.1% rebound after the previous contraction.
A positive print would support expectations that the UK began the fourth quarter on firmer footing. The UK’s fiscal watchdog has already revised its annual GDP outlook upward to 1.5% from 1.0%, offering some optimism.
However, the Pound still faces pressure from a soft labour market and uncertainty over the strength of domestic demand.
BoE Rate Cut Expectations Weigh on GBP
Market pricing now leans toward a 25-bps BoE rate cut next week, which would bring the policy rate down to 3.75%. This expectation limits GBP upside, even with a weaker US Dollar in the background. Traders believe the BoE may need to loosen policy sooner to support economic momentum, prompting reduced appetite for buying the Pound at higher levels.
US Dollar Stays Weak After Fed Cut
The US Dollar Index trades near a seven-week low around 98.54 after the Federal Reserve delivered a 25-bps cut and signaled only one reduction in 2026. Lower inflation projections and rising unemployment reinforced a softer Dollar tone.
Still, some resistance remains after Powell noted that more cuts will require convincing evidence of economic deterioration. Today’s US Initial Jobless Claims, expected at 220K, may influence near-term direction.
GBP/USD Technical Outlook
GBP/USD is trading near $1.3377, holding firmly inside a rising channel that has guided the uptrend since early December. Price is finding steady support at $1.3351, where the 20-EMA continues to act as a dynamic floor. A brief test of $1.3391 drew selling pressure, with long upper wicks showing hesitation at resistance.
A break above $1.3391 would open the door toward $1.3420, followed by the channel’s upper boundary near $1.3446.
On the downside, support rests at $1.3351, then $1.3323. A drop beneath the channel floor would weaken the broader structure. RSI near 63 indicates improving momentum without reaching overbought territory, supporting a gradual upward bias as long as price holds above the mid-channel trendline.
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