Pound sterling price strengthens to near $1.33 after UK GDP data beats expectations
Pound sterling strengthens as UK GDP growth beats expectations
The British pound surged to $1.329 on Thursday, buoyed by stronger-than-expected GDP data that signaled resilience in the UK economy and eased pressure for aggressive rate cuts by the Bank of England (BoE). The UK economy grew 0.7% in the first quarter, surpassing expectations of 0.6%, with year-on-year growth hitting 1.3%.
These figures prompted traders to scale back their expectations for how much the BoE might lower interest rates in the near future. While a rate cut is still anticipated, the solid GDP print suggests the economy is not weak enough to warrant deeper easing just yet.
GBP/USD price dynamics (May 2025) Source: TradingView.
UK GDP beats expectations but mixed indicators remain
The pound found further support as the U.S. dollar softened, partly due to speculation that the U.S. may push for a weaker currency in trade negotiations, particularly following the 90-day trade truce with China. The dollar’s pullback boosted most major currencies, including sterling.
However, despite the positive GDP data, not all UK indicators were favorable. Unemployment ticked higher, and wage growth showed signs of slowing, signaling that momentum remains uneven. Manufacturing and industrial production also declined in March, with month-on-month contractions of 0.8% and 0.7%, respectively, surpassing expectations.
Technical outlook for GBP/USD: Bullish trend intact
From a technical perspective, the pound is holding strong above its 20-day Exponential Moving Average (EMA) at $1.3256, signaling a bullish near-term trend. The Relative Strength Index (RSI) is currently oscillating between 40.00 and 60.00, indicating potential for fresh bullish momentum if the RSI breaks above the 60.00 threshold. On the upside, the 3-year high of $1.3445 remains a key resistance level, while on the downside, the psychological level of $1.3000 is likely to act as strong support.
As previously discussed, the better-than-expected GDP print has provided the pound with significant support, reducing immediate concerns about the UK economy’s stagnation. Traders will be focused on the next steps from the BoE, particularly after BoE official Catherine Mann suggested that current monetary policy levels are appropriate given the solid labor market and inflation risks.
