GBP/USD holds above 1.3600 despite grim UK economic data

GBP/USD returns to 1.3600 after hitting session highs at the 1.3600 area.
Weak UK GDP figures feed expectations of further BoE rate cuts down the road.
The US Dollar found support following strong jobs data, but is failing to bounce up from lows.

Guillermo Alcala FXStreet

The Pound (GBP) lost ground against its main peers on Thursday, following a string of disappointing UK economic indicators. The GBP/USD pair, however, has remained steady above 1.3600 and is picking up to 1.3640 at the time of writing, keeping a mild upside trend from last week’s lows intact.

Preliminary UK Gross Domestic Product (GDP) data revealed that the economy grew 0.1% in the fourth quarter of 2025 and 1% from the same period last year, against the market consensus for a 0.2% quarterly and a 1.2% yearly growth. The third quarter’s GDP has been revised down to a 1.2% advance from the previously estimated 1.3% reading.

Weak services and manufacturing output have weighed down the fourth quarter's economic performance. The UK’s Manufacturing Production contracted 0.5% in December, following a 1.9% rise in November, revised down from 2.1%, while the services sector’s output showed a flat reading in Q4, below expectations for a steady 0.2% growth.

These figures cement market expectations that the Bank of England (BoE) will have to lower borrowing costs further to support economic growth, which is likely to cap speculative demand for the GBP.
In the US, Nonfarm Payrolls data beat expectations, prompting investors to pare back hopes of immediate Federal Reserve (Fed) rate cuts, although the high concentration of January’s jobs and a sharp revision of employment growth figures from 2025 are keeping a lid on the US Dollar’s recovery.

Economic Indicator

Gross Domestic Product (YoY)

The Gross Domestic Product (GDP), released by the Office for National Statistics on a monthly and quarterly basis, is a measure of the total value of all goods and services produced in the UK during a given period. The GDP is considered as the main measure of UK economic activity. The YoY reading compares economic activity in the reference quarter compared with the same quarter a year earlier. Generally speaking, a rise in this indicator is bullish for the Pound Sterling (GBP), while a low reading is seen as bearish.

Economic Indicator

Manufacturing Production (YoY)

The Manufacturing Production released by the National Statistics measures the manufacturing output. Manufacturing Production is significant as a short term indicator of the strength of UK manufacturing activity that dominates a large part of total GDP. A high reading is seen as positive (or bullish) for the GBP, while a low reading is seen as negative (or bearish).

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