British Pound moves away from two-month low after UK Q2 GDP as USD retreats ahead of PCE

The GBP/USD pair attracts some buyers during the early European session on Wednesday and moves away from a two-month low, around the 1.3200 mark touched the previous day. Spot prices climb to the 1.3260 area following the release of the final UK GDP print, though the upside potential seems limited as traders might opt to move to the sidelines ahead of important US macro data.

The Office for National Statistics (ONS) reported that the UK economy grew by 0.5% in the second quarter of 2026, which is an upward revision from the initial estimate of 0.4%. The data reaffirms rising market bets for a 25-basis-point (bps) rate hike by the Bank of England (BoE) at the upcoming meeting on November 5, providing a modest lift to the British Pound (GBP). The US Dollar (USD), on the other hand, is pressured by retreating US bond yields and offers additional support to the GBP/USD pair.

US Treasury yields pulled back from multi-year highs amid the overnight fall in crude oil prices to a three-week low and dovish remarks from New York Federal Reserve (Fed) President John Williams, saying that the US central bank need not rush its next move. Adding to this, the Conference Board's US Consumer Confidence Index declined to its lowest reading since May 2014, prompting some follow-through USD profit-taking. However, hawkish Fed expectations could limit deeper USD losses.

According to CME Group's FedWatch Tool, traders are still pricing in over a 90% chance that the Fed will raise borrowing costs again by the end of this year. Furthermore, persistent geopolitical uncertainties stemming from the US-Iran standoff might continue to underpin the safe-haven Greenback, warranting some caution before placing aggressive bullish bets on the GBP/USD pair. Traders also seem hesitant ahead of the release of the US Personal Consumption Expenditures (PCE) Price Index.

This will be accompanied by the final US Q2 GDP print, which, along with speeches from influential FOMC members, would drive the USD later during the North American session. The focus, however, will be on the popularly known as the US Nonfarm Payrolls (NFP) report, due on Friday. The crucial macro releases will be looked to for more cues about the Fed's policy path, which, in turn, will play a key role in determining the next leg of a directional move for the buck and the GBP/USD pair.

GBP/USD daily chart

Technical Analysis

The GBP/USD pair keeps a bearish near-term tone below the 200-day Simple Moving Average (SMA), suggesting that any subsequent move up is likely to confront stiff resistance ahead of the 1.3300 mark. A sustained move beyond, however, might trigger a short-covering rally and pave the way for further gains.

On the downside, a break below the 1.3200 mark will set the stage for a fall towards retesting the year-to-date low, around the 1.3140 region, touched in June. This is followed by the 1.3100 round figure, which, if broken, will set the stage for an extension of the recent downtrend witnessed over the past month or so.

(The technical analysis of this story was written with the help of an AI tool. Know more.)