GBP/USD Price Forecast - Pound Shrugs Off 0.3% UK GDP Beat As Strong USD Caps Upside

GBP/USD Holds 1.34 As UK Growth Surprise Collides With A Stronger USD

UK GDP Upside Gives GBP Just Enough Support Around 1.3440

GBP/USD is stabilizing roughly in the 1.3430–1.3440 band after UK data forced traders to rethink how weak the British economy really is. November GDP rose 0.3% m/m, reversing October’s -0.1% contraction and beating the 0.1% consensus. That is the strongest monthly print since June and it was broad-based. Services expanded by around 0.2–0.3%, industrial production gained 1.1%, and manufacturing jumped 2.1%, with autos rebounding as car production normalized after the Jaguar Land Rover cyber incident.
This profile is not a boom, but it kills the “UK is already rolling over” narrative. With GDP accelerating instead of slipping, Bank of England hawks have cover to resist immediate easing. A 25 bp cut is still fully priced for June, not February, which is why GBP hasn’t collapsed despite a firmer dollar. The data effectively puts a floor under GBP/USD near the 1.34 handle: the macro story is “weak but resilient,” not “urgent easing now.”

USD Side Of GBP/USD: Strong Retail Sales, 3.0% PPI And A 99.20 DXY

On the other side of the pair, USD has a clear fundamental tailwind. November US Retail Sales rose 0.6% m/m after a -0.1% dip in October and beat the 0.4% forecast. Headline PPI printed 3.0% YoY versus 2.8% prior and above expectations, and core PPI was also 3.0% YoY. That tells you demand is still strong and pipeline inflation hasn’t disappeared.
The result is a US Dollar Index (DXY) grinding higher around 99.15–99.20, with the market now comfortable that the Fed keeps rates unchanged in January and waits until roughly June for the first cut. Political noise around Fed independence – a DoJ probe into Powell and Trump’s criticism – has not broken that narrative, especially after Trump spelled out he has no plan to fire Powell. For GBP/USD, this mix is simple: you have a better UK print but a dollar backed by 0.6% sales growth and 3.0% PPI. That caps upside and keeps the pair stuck near the middle of its recent range instead of marching straight toward 1.37–1.40.

Range Trade In GBP/USD: 1.3425–1.3550 Box With 1.3390 As The Real Line In The Sand

On the 4-hour chart, GBP/USD is doing exactly what a market in macro standoff does: it is chopping. Price has been oscillating in a horizontal band roughly between 1.3425 and 1.3550, with the last prints around 1.3430–1.3440. Candles are small, bodies overlap, and there is no directional conviction.
Momentum confirms it. The RSI sits just under 50, around 45, which is neutral – not overbought, not oversold. Short-term moving averages (20, 50, 100 periods) are flattening and clustering slightly above spot, acting as immediate dynamic resistance on pops. Beneath price, the 200-period MA near 1.3390 is the key structural support on the 4-hour frame. As long as GBP/USD holds above 1.3390–1.3350, the broader uptrend off the November lows remains intact, but failure to reclaim 1.3500–1.3550 keeps bulls in check.

Bigger Picture For GBP/USD: From 1.31 Low Toward 1.36 With 1.48 Still On The Radar

Zooming out, the structure since early November still leans constructive for GBP. The pair carved out a major low around 1.3100–1.3105 in November and a subsequent corrective floor at roughly 1.3010, which Elliott-wave desks treat as the end of wave 2 in a larger impulsive advance. From around 1.3190 on 13 November, projections were laid out for a rally that could ultimately extend toward 1.48 if the full cycle plays out.
So far, GBP/USD has printed a high near 1.3567, so only the first leg of that roadmap has been realized. The pullback from above 1.3550 down to the 1.3430 zone fits a classic pause inside a broader upwave, not an immediate top. As long as spot defends 1.3350–1.3390 and respects the rising medium-term trendline, the larger bullish scenario – gradual extension toward the mid-1.30s and eventually the high-1.40s – is technically still alive. The market, however, is refusing to pay up for that scenario until it sees either softer US data or a clearer BoE stance.

Short-Term Pressure: GBP/USD Still Wrestling With A Bearish Corrective Wave

Despite the bigger bullish map, the short-term tone is not friendly to GBP. Intraday, GBP/USD is trading below the EMA50 on some timeframes, a sign that the last leg higher has lost momentum and that a bearish corrective wave dominates the near-term. Economies-based models highlight that the pair has already shaken off oversold conditions on RSI, yet price is still unable to regain the moving average cluster. That combination – negative divergence cleared but no price recovery – often precedes another push lower.
You can see it in price behavior: repeated attempts to bounce above 1.3500 are being sold, and the market recently slipped toward the 1.3360 region, which earlier marked four-week lows. Each rebound toward 1.35–1.3550 is meeting supply, while dips into the high-1.33s are attracting demand, but with less enthusiasm. This is how a correction grinds on without collapsing: a series of lower intraday highs sitting on top of a still-intact medium-term floor.

Critical Levels On GBP/USD: 1.3550, 1.35, 1.3440, 1.3390, 1.3350 And 1.3250

The market is trading the numbers, not the headlines:
At the top of the current structure, 1.3550 is the important cap. It stopped the recovery from the 1.31 lows and lines up with prior highs, so a daily close above 1.3550 would confirm a new bullish leg. Just below, 1.3500 is the first hurdle; failure there keeps the short-term bias heavy.
In the middle, 1.3440 – today’s neighborhood – is the pivot where stronger UK GDP and stronger US data cancel each other out. This zone is also near yesterday’s 1.3430 trade, where the pair was described as “stable” despite the data.
On the downside, 1.3390 (200-period MA on H4) is the first real line in the sand. A clean break and hold below 1.3390 exposes 1.3350, the lower boundary of the recent range. Lose 1.3350 with momentum and the door opens toward 1.3250, which is the next meaningful support in the broader structure and where medium-term bulls would be forced to reassess.

Macro And Geopolitics Around GBP/USD: Iran Risk, Greenland Noise, BoE–Fed Divergence

Beyond the hard data, GBP/USD is responding to a messy macro backdrop. Tensions around Iran have supported the dollar at times as investors hedged geopolitical risk, even while the latest Trump comments on executions and strikes have reduced the probability of immediate escalation. Traders are also watching renewed references to Greenland in the geopolitical chatter, which adds another layer of uncertainty and encourages holding USD as a liquidity hedge.
For the UK, the story is simpler: a 0.3% monthly GDP rebound, 0.2–0.3% services growth, 1.1% industrial and 2.1% manufacturing strength argue against aggressive BoE easing. That’s why the curve has left the first 25 bp cut fully priced only by June, not sooner.
For the US, 0.6% retail sales and 3.0% headline and core PPI argue for keeping rates restrictive a bit longer, pushing out cut expectations while the DXY holds around 99.20. Powell’s pushback against political pressure and Trump’s statement that he won’t remove him keep Fed independence roughly intact, which is supportive for USD. Net result: both sides have reasons to be firm, and GBP/USD is the release valve.

Trading View On GBP/USD: Neutral Bias, Tactical Bullish On Dips – Overall Hold

Putting all of it together – 1.3440 spot, 0.3% UK GDP, 0.6% US retail sales, 3.0% PPI, a 99.20 DXY, a range of 1.3425–1.3550, and a medium-term map that still points toward 1.48 – the call here is Hold, with a tactical bullish bias on controlled dips.
As long as GBP/USD trades above 1.3350–1.3390, the broader uptrend off the 1.31–1.3010 base is alive and the pair looks like a buy-on-weakness, not a short. A move back through 1.3500 and then 1.3550 would confirm that the market is ready to re-price toward the high-1.30s and eventually revisit the 1.40+ conversation.
If price breaks and holds below 1.3350, risk shifts. In that case, the corrective bearish wave gains control, 1.3250 comes into focus, and GBP/USD flips from tactical buy-the-dip to a clean Sell until the next base is formed. Until that break happens, the data and structure argue for Hold: respect the range, fade extremes, and wait for either 1.3550 or 1.3350 to give way before committing to a stronger directional view.

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