Pound Sterling rises as markets await crucial UK GDP figures

Pound Sterling Strengthens Ahead of Key UK Economic Data

On Wednesday, the British Pound (GBP) advanced against most major currencies, with the exception of the Australian and New Zealand Dollars. This upward movement comes as traders anticipate the release of the United Kingdom's monthly Gross Domestic Product (GDP) figures and manufacturing statistics, scheduled for Thursday.

Projections from the UK Office for National Statistics (ONS) suggest that the economy grew by 0.1% in November. Manufacturing Production is forecast to have increased by 0.5% month-over-month, while Industrial Production is expected to remain largely unchanged.

Market participants are closely monitoring the upcoming GDP report for insights into the current health of the UK economy. Notably, GDP contracted by 0.1% in both September and October, following a flat reading in August.

The forthcoming data will also influence expectations regarding the Bank of England’s (BoE) future monetary policy direction. At its December meeting, the BoE indicated that interest rates are likely to follow a gradual downward trajectory.

During the European session, BoE policymaker Alan Taylor, speaking at a summit in Singapore, expressed his view that interest rates may soon return to neutral levels, citing the possibility that inflation could reach target by mid-2026.

Market Highlights: Central Bank Leaders Support Fed Chair Powell

• During Wednesday’s European session, the Pound Sterling climbed 0.2% to approach 1.3445 against the US Dollar (USD), as GBP/USD benefited from Sterling’s relative strength while the US Dollar softened.
• The US Dollar Index (DXY), which measures the Greenback against a basket of six major currencies, slipped to around 99.10, though it remains near its monthly peak of 99.26.
• On Tuesday, the US Dollar surged following the release of December’s Consumer Price Index (CPI) data, which showed both headline and core inflation holding steady at 2.7% and 2.6% year-over-year, respectively. This reinforced expectations that the Federal Reserve (Fed) will maintain rates at its upcoming meeting.
• Despite stable inflation, US President Donald continued to urge Fed Chair Jerome Powell to lower rates further, commending the inflation figures. According to Reuters, Trump remarked, “We have very low inflation. That would give ’too late Powell’ the chance to give us a nice beautiful big rate cut.”
• Investors are also awaiting the United States Producer Price Index (PPI) data for October and November, set for release at 13:30 GMT, for additional inflation signals.
• Meanwhile, central bank leaders worldwide have voiced their backing for Fed Chair Jerome Powell amid his legal challenges, which he described as a “pretext” for resisting presidential pressure. Leaders from the European Central Bank (ECB), the BoE, and nine other central banks jointly emphasized that “central bank independence is fundamental to price, financial, and economic stability for the benefit of the public,” adding, “we stand in full solidarity with the Fed System and its Chair Jerome H. Powell.”

GBP/USD Technical Overview: Pair Hovers Near 20-Day EMA

At the time of writing, GBP/USD is trading at 1.3437. The 20-day Exponential Moving Average is positioned at 1.3439, with the pair testing this dynamic resistance. A daily close above this level could enhance short-term bullish momentum. The Relative Strength Index (RSI) stands at 52, indicating neutral but slightly improving momentum.

Looking at the broader range from the 1.3780 high to the 1.3006 low, the 50% Fibonacci retracement at 1.3393 serves as resistance during rebounds, while the 61.8% retracement at 1.3485 limits further gains. A sustained move above 1.3485 would suggest the bearish trend is weakening and could fuel further recovery, whereas failure to break this level may keep the pair trading sideways.

(This technical analysis was prepared with assistance from an AI tool.)