empty
15.05.2025 07:38 PM
GBP/USD. The Pound Ignores the UK's Optimistic GDP Report

The UK's economic growth report released today offered support to GBP/USD buyers, although the market's reaction was muted.

Traders are reluctant to open large positions ahead of today's speech by Federal Reserve Chair Jerome Powell — his first since the announcement of a temporary trade truce between the U.S. and China. Market participants remain cautious, which is reflected in reduced volatility across currency pairs. GBP/USD is no exception, especially since today's report has its flaws.

This image is no longer relevant

The headline figures landed in positive territory, indicating that the UK economy is in good shape. In March, GDP grew by 0.2% MoM, whereas most analysts had forecast flat growth.

Quarterly data also surpassed expectations: from January to March, the UK economy expanded by 0.7% q/q, following a modest 0.1% growth in Q4 of last year (consensus was 0.5%). On a year-on-year basis, GDP rose by 1.3% in Q1 versus a forecast of 1.2%.

However, the manufacturing and industrial sectors disappointed. Industrial production shrank by 0.7% MoM in March (after a 1.7% increase in February) — the worst reading since July last year. The quarterly figure also fell by 0.7%.

Manufacturing output dropped 0.8% MoM (after a 2.4% surge the previous month) and fell 0.8% YoY (compared to a 0.5% gain previously).

On the positive side, the services sector grew by 0.7% q/q, following a 0.6% increase in February. This indicator has shown consistent growth over the past four months.

Despite some weak spots, the report suggests that the UK economy remains in relatively good shape. This gives the Bank of England (BoE) reason not to rush into further monetary easing — a stance already hinted at by several policymakers. Following the May meeting, Governor Andrew Bailey emphasized that interest rates were not "on autopilot." Catherine Mann, who voted to hold rates (alongside BoE Chief Economist Huw Pill), echoed this sentiment today. She stated that the UK labor market remains strong and warned that new tariffs could spur inflation.

This follows Monday's labor market report, which showed a slight uptick in unemployment (from 4.4% to 4.5%) and a smaller-than-expected rise in jobless claims (5,000 vs. forecasted 22,000). Commenting on the data, Mann acknowledged signs of labor market cooling but called it a "nonlinear adjustment." In her view, monetary policy should remain unchanged in the near term, and the GDP report only strengthens that position.

Traders showed little enthusiasm for the report, largely because the outcome of the BoE's next (June) meeting is already priced in. At its May meeting, the BoE did not signal any imminent rate cuts, maintained a cautious tone, and upgraded its economic forecasts. Today's data simply reinforced expectations that the central bank will leave policy unchanged in June. While the broader path of gradual easing remains in place, markets continue to expect two more rate cuts by year-end.

In other words, today's release increased the odds of a June pause — but that was already baked into prices. Thus, GBP/USD volatility remained subdued.

The pair is now at the mercy of the dollar, which is awaiting today's speech from Fed Chair Jerome Powell. He may comment on the temporary trade truce with China and recent U.S. inflation data. Recall that headline CPI slowed to 2.3% y/y in April, while core CPI held steady at 2.8%. Meanwhile, the PPI decelerated more significantly — headline PPI fell from 3.4% to 2.4%, and core PPI dropped from 4.0% to 3.1%. If Powell downplays market optimism about the trade truce (which already seems to be fading), the dollar could come under renewed pressure, potentially lifting GBP/USD toward the 1.34 area. Conversely, if Powell supports the greenback, the pair could fall toward the 1.32 level — although a decisive break below 1.3200 appears unlikely.

Technical Outlook

On the daily chart, GBP/USD is trading between the middle and lower Bollinger Bands, hovering near the median line, and sitting right at the Tenkan-sen. A breakout above the 1.3310 resistance level (the Bollinger Bands median) would validate long positions, placing the pound between the middle and upper bands, and above all Ichimoku lines — forming a bullish "line parade" signal. The upside target in that case is 1.3430 (the upper Bollinger Band on D1).

Given the current fundamental backdrop, any downward impulses should be treated as buying opportunities. In my view, the dollar remains vulnerable due to stalled U.S.-EU trade talks and the continued delay in launching full-scale U.S.-China negotiations.

Irina Manzenko,
Analytical expert of InstaForex
© 2007-2025
Select timeframe
5
min
15
min
30
min
1
hour
4
hours
1
day
1
week
Earn on cryptocurrency rate changes with InstaForex
Download MetaTrader 4 and open your first trade
  • Grand Choice
    Contest by
    InstaForex
    InstaForex always strives to help you
    fulfill your biggest dreams.
    JOIN CONTEST

Recommended Stories

GBP/USD Overview – June 9: Nonfarms Did Not Disappoint

The GBP/USD currency pair also traded lower on Friday and even settled slightly below the moving average line. While we constantly say there are no reasons for the pound

Paolo Greco 04:03 2025-06-09 UTC+2

EUR/USD Overview – June 9: A New Episode of the "American Circus"

The EUR/USD currency pair traded with a slight decline on Friday, which was driven by decent macroeconomic data from the U.S. However, reports from the Eurozone also turned out quite

Paolo Greco 04:03 2025-06-09 UTC+2

EUR/USD. Weekly Preview. Inflation and More Inflation

The upcoming trading week will revolve around American inflation. In the United States, data will be published on the growth of the Consumer Price Index (CPI), the Producer Price Index

Irina Manzenko 02:39 2025-06-09 UTC+2

U.S. Dollar: Weekly Preview

In the United States, as usual, there will be far more interesting events and news than in the Eurozone or the United Kingdom. Economic data will start arriving on Wednesday

Chin Zhao 00:55 2025-06-09 UTC+2

British Pound: Weekly Preview

In the United Kingdom, the news background for the upcoming week will be much more interesting, although I do not believe it will significantly impact market sentiment. The pound continues

Chin Zhao 00:55 2025-06-09 UTC+2

Euro Currency: Weekly Preview

Boredom—pure and simple. That's how the upcoming week looks for the European currency. I want to clarify from the beginning that this review focuses solely on the European news background

Chin Zhao 00:55 2025-06-09 UTC+2

The Market Realized That Money Isn't Everything

Which is stronger — money or power? The answer to this question became clear very quickly. In the conflict between the most influential president in the world, Donald Trump

Marek Petkovich 00:07 2025-06-09 UTC+2

Bitcoin Heads for Conflict

The biggest surprise of June has been the divergence between U.S. stock indices and cryptocurrencies. The S&P 500 and Bitcoin are typically considered risk assets, historically moving hand in hand

Marek Petkovich 00:07 2025-06-09 UTC+2

XAU/USD. Analysis and Forecast

Today, gold maintains a positive tone; however, bulls are acting cautiously, preferring to refrain from aggressive buying ahead of the release of the important U.S. Non-Farm Payrolls (NFP) report

Irina Yanina 15:30 2025-06-06 UTC+2

WTI. West Texas Intermediate. Traders Await NFP

Prices for West Texas Intermediate (WTI) crude oil remain in the middle of a three-day range. Prices are supported by hopes for the resumption of trade negotiations between the U.S

Irina Yanina 11:23 2025-06-06 UTC+2
Can't speak right now?
Ask your question in the chat.
Widget callback
 

Dear visitor,

Your IP address shows that you are currently located in the USA. If you are a resident of the United States, you are prohibited from using the services of InstaFintech Group including online trading, online transfers, deposit/withdrawal of funds, etc.

If you think you are seeing this message by mistake and your location is not the US, kindly proceed to the website. Otherwise, you must leave the website in order to comply with government restrictions.

Why does your IP address show your location as the USA?

  • - you are using a VPN provided by a hosting company based in the United States;
  • - your IP does not have proper WHOIS records;
  • - an error occurred in the WHOIS geolocation database.

Please confirm whether you are a US resident or not by clicking the relevant button below. If you choose the wrong option, being a US resident, you will not be able to open an account with InstaForex anyway.

We are sorry for any inconvenience caused by this message.