GBP/USD churns ahead of UK GDP growth check

GBP/USD tested the low side on Wednesday, but remains steady near 1.2450.
Cable markets are coiling ahead of the next round of UK GDP growth figures.
US PPI inflation also in the barrel for Thursday after CPI inflation ticked higher.

Joshua Gibson FXStreet

GBP/USD is coiled around 1.2450, churning the charts near middling technical ground as Pound Sterling traders await the UK’s latest Gross Domestic Product (GDP) growth figures. US Consumer Price Index (CPI) inflation accelerated in January, and markets will be watching Thursday’s US Producer Price Index (PPI) for signs of further inflation factors to be passed onto consumers.

Preliminary UK GDP for 2024’s fourth quarter is due on Thursday. Median market forecasts are expecting an uptick in annualized growth figures, with annualized Q4 GDP expected to clock in at 1.1% versus the previous 0.9%. Outside of the overall improvement, the fourth quarter is expected to lag, forecast to come in at a -0.1% contraction QoQ versus the previous flat print of 0.0%.

Forex Today: Further US inflation gauges should rule the sentiment

On the US side, PPI inflation will face renewed scrutiny on Thursday. US CPI accelerated in January, with headline CPI inflation rising to 3.0% YoY versus the expected hold at 2.9%. The near end of the tail bore the brunt of the increase, with MoM CPI coming in at 0.5%. Markets expected MoM headline CPI to come in at 0.3% versus the last print of 0.4%.

Core US PPI inflation will be the heavy-hitter on Thursday. Median market forecasts expect the print to slightly decline to 3.3% YoY from 3.5%. However, Wednesday’s inflation uptick has investors on edge that US inflation is entrenching itself deeper in the US domestic economy.

GBP/USD price forecast

GBP/USD ran out of bullish gas on Wednesday, keeping bids strung along the midrange of a recent consolidation phase. Cable continues to churn just south of the 50-day Exponential Moving Average (EMA) near 1.2500, keeping price action under wraps as technical traders await signs of meaningful momentum in either direction.

GBP/USD daily chart

Pound Sterling FAQs

What is the Pound Sterling?

The Pound Sterling (GBP) is the oldest currency in the world (886 AD) and the official currency of the United Kingdom. It is the fourth most traded unit for foreign exchange (FX) in the world, accounting for 12% of all transactions, averaging $630 billion a day, according to 2022 data. Its key trading pairs are GBP/USD, also known as ‘Cable’, which accounts for 11% of FX, GBP/JPY, or the ‘Dragon’ as it is known by traders (3%), and EUR/GBP (2%). The Pound Sterling is issued by the Bank of England (BoE).

How do the decisions of the Bank of England impact on the Pound Sterling?

The single most important factor influencing the value of the Pound Sterling is monetary policy decided by the Bank of England. The BoE bases its decisions on whether it has achieved its primary goal of “price stability” – a steady inflation rate of around 2%. Its primary tool for achieving this is the adjustment of interest rates. When inflation is too high, the BoE will try to rein it in by raising interest rates, making it more expensive for people and businesses to access credit. This is generally positive for GBP, as higher interest rates make the UK a more attractive place for global investors to park their money. When inflation falls too low it is a sign economic growth is slowing. In this scenario, the BoE will consider lowering interest rates to cheapen credit so businesses will borrow more to invest in growth-generating projects.

How does economic data influence the value of the Pound?

Data releases gauge the health of the economy and can impact the value of the Pound Sterling. Indicators such as GDP, Manufacturing and Services PMIs, and employment can all influence the direction of the GBP. A strong economy is good for Sterling. Not only does it attract more foreign investment but it may encourage the BoE to put up interest rates, which will directly strengthen GBP. Otherwise, if economic data is weak, the Pound Sterling is likely to fall.

How does the Trade Balance impact the Pound?

Another significant data release for the Pound Sterling is the Trade Balance. This indicator measures the difference between what a country earns from its exports and what it spends on imports over a given period. If a country produces highly sought-after exports, its currency will benefit purely from the extra demand created from foreign buyers seeking to purchase these goods. Therefore, a positive net Trade Balance strengthens a currency and vice versa for a negative balance.

Author

Joshua Gibson

FXStreet

Joshua joins the FXStreet team as an Economics and Finance double major from Vancouver Island University with twelve years' experience as an independent trader focusing on technical analysis.

GBP/USD extends the drop to 1.3360

GBP/USD builds on Monday’s decline and briefly clinches five-day lows near 1.3360 on Tuesday. Cable’s extra pullback follows the better tone in the Greenback as uncertainty in the Middle East prompts investors to adopt a cautious stance. Meanwhile, an apathetic UK labour market report also collaborates with the selling pressure on the British Pound.

EUR/USD stays offered just above 1.1400

EUR/USD keeps the downtrend well in place for yet another day, challenging the 1.1400 contention zone on Tuesday. The continuation of the selling impulse in spot comes amid decent gains in the US Dollar, which continues to find support in the persistent effervescence surrounding the US-Iran crisis.

Middle East crisis intensifies, Gold up

Gold now seems to have embarked on a consolidative phase below the key $4,100 mark per troy ounce in the latter part of Tuesday’s session. Meanwhile, uncertainty surrounding the Middle East conflict and rising expectations for a hawkish Fed policy outlook are expected to limit the precious metal’s bullish momentum in the near term.

XRP rebounds on rising on-chain activity

Ripple (XRP) ticks up and trades around $1.13 at the time of writing on Tuesday. This rebound aligns with a broader recovery in the cryptocurrency market, attributed to reports that mediators between the United States (US) and Iran are seeking a 10-day cessation of strikes to find a way back to the signed Memorandum of Understanding (MoU).

The Iranian war has again risen

The Iranian war has again risen to the top of the economics factor list. There is no end in sight. Intelligence experts say the current level of offense/retaliation will not change minds in Tehran, while in Washington, Trump fears all-out war, which would mean boots on the ground.

US Dollar mid-year outlook: Exceptional currency, exceptional risks?

The US Dollar enters the second half of 2026 in a markedly different position from a year ago. The King currency has recovered, reflecting persistent US inflation, changing expectations for Fed policy, geopolitical tensions and renewed demand for defensive assets.