The GBP/USD currency pair is showing signs of renewed strength, trading near 1.3280 during Thursday’s Asian session, as investors prepare for the release of the UK’s Q1 GDP figures. A softer US Dollar (USD), weighed down by persistent trade-related uncertainties, has helped bolster the pair, with growing speculation that the United States may strategically favor a weaker currency to enhance its global trade position.
NordaLueur’s team breaks down the topic with clarity and depth in the article.
US Dollar Remains Under Pressure
The USD has been under broad pressure, primarily due to market speculation that Washington may intentionally shift toward a weaker dollar policy to boost exports and counterbalance trade disadvantages. This line of thought has been reinvigorated by recent commentary suggesting that the US Administration views a strong dollar as a liability in global trade negotiations, especially when competing currencies such as the euro and yen remain relatively weak.
However, the downside for the USD appears somewhat limited for now. The improvement in global trade sentiment, following a partial resolution of prior tensions, has helped to ease recession fears.
This, in turn, has tempered market expectations of aggressive rate cuts by the Federal Reserve (Fed). According to LSEG data, traders now price in a 74% probability of a 25-basis-point cut in September, significantly lower than previous projections that pointed to a July move.
GBP Steady Amid Reassessment of BoE Outlook
The British Pound (GBP) has found near-term stability amid a recalibration of expectations surrounding the Bank of England’s (BoE) policy trajectory. Earlier this week, UK labor market data for the three months ending March revealed slowing employment growth, an uptick in the unemployment rate, and signs of wage moderation.
These figures suggest that UK employers may have pulled back on hiring ahead of higher National Insurance contributions that came into effect in April 2025. Despite the cooling labor conditions, the BoE may find some comfort in the moderate pace of wage growth, especially given its impact on services inflation, which remains a persistent driver of underlying price pressures in the UK.
Market Focus on UK Q1 GDP
Investor attention is now firmly centered on the upcoming release of the UK’s preliminary Q1 Gross Domestic Product (GDP) data. The British economy is projected to have grown by 0.6% in the first quarter of 2025—an impressive rebound from the 0.1% expansion seen in Q4 2024. This would represent the fastest pace of quarterly growth since mid-2022 and could significantly bolster market confidence in the UK’s post-recession recovery.
If confirmed, the 0.6% growth rate may also reinforce expectations that the UK economy is moving toward a more stable footing, especially after a year marked by volatility and stagflation concerns. Stronger GDP data may lead to hawkish repricing of the BoE’s policy path, particularly if accompanied by robust manufacturing and industrial production figures.
The release of factory output data will also be in sharp focus, as it serves as a proxy for business investment and domestic demand. A positive surprise in either of these reports could provide additional upward momentum for the GBP/USD pair, possibly pushing it towards the psychological 1.3300 mark.
Technical Outlook for GBP/USD
From a technical perspective, the GBP/USD pair appears to be in a short-term recovery phase, rebounding from recent support near 1.3150. The 1.3280–1.3300 zone now represents a key resistance level, and a decisive break above this area could pave the way for a move toward 1.3350, last seen in early April.
On the downside, immediate support lies near the 1.3220 level, followed by a more robust floor at 1.3150, where buying interest could potentially re-emerge. Momentum indicators, such as the Relative Strength Index (RSI) on the 4-hour chart, suggest a neutral-to-bullish bias, supporting the idea of further near-term gains, especially if UK data surprises to the upside.
Conclusion
The GBP/USD pair is gaining traction ahead of critical macroeconomic releases from both the UK and the US, with broad dollar weakness and shifting policy expectations acting as major catalysts. While short-term volatility remains likely due to incoming US PPI and retail sales figures, the main event for sterling traders will be the release of UK Q1 GDP.
A solid growth print could affirm the resilience of the UK economy, potentially strengthening the pound further and pushing GBP/USD decisively above 1.3300. Conversely, any disappointment could lead to a reversal of recent gains, especially if US data comes in strong.
In the near term, the pair is likely to remain sensitive to policy cues, economic data surprises, and the broader risk sentiment—all of which continue to shape the GBP/USD trajectory in a post-pandemic, post-Brexit trading environment.
