GBP/USD slides: Weak UK economy falters ahead of central bank bonanza
- GBP/USD is dipping, but hanging tough above the important 1.2900 level as things remain uncertain.
- In a surprise, the UK economy shrank by 0.1% in January, increasing speculation about potential interest rate cuts from the Bank of England.
- US consumers are expecting inflation to rise significantly, making the Fed’s decisions trickier, especially with those US tariffs looming on April 2nd.
The British Pound has seen a bit of a downturn for two days in a row now, slipping about 0.14% against the US Dollar on Friday. This came after the latest UK economic figures revealed that the country’s Gross Domestic Product (GDP) had actually contracted. Even with this news, the GBP/USD pair is still trading above the 1.2900 mark, and looks like it’ll close out the day pretty close to that level.
GBP/USD feels the pressure after UK GDP disappoints, while US inflation worries complicate the Fed’s next step
Fresh data from the University of Michigan (UoM) recently showed that consumer spirits in March have dampened, falling from 64.7 to 57.9. This is lower than the 63.1 forecast in the survey. What’s really catching attention is that people’s expectations for inflation have jumped. Americans now anticipate inflation to hit 4.9% over the next 12 months, up from 4.3%. Looking further ahead, over the next five years, consumers are bracing for price increases of 3.9%, compared to the previous 3.5%.
GBP/USD traders are now keenly focused on the upcoming week, which is packed with central bank activity, starting with the Federal Reserve. Just last Friday, Fed Chair Jerome Powell pointed out that “market measures of inflation expectations have edged upwards, largely due to tariffs.”
So, this latest inflation reading could make it harder for the Fed to think about easing up on policy, especially with US President Donald Trump set to impose those reciprocal tariffs on April 2nd.
Across the Atlantic, the UK economy took an unexpected hit, shrinking by -0.1% month-over-month in January. This was a surprise miss, as analysts had predicted a 0.1% expansion. Following this data, financial markets have started to price in a more aggressive 56 basis points of interest rate cuts from the Bank of England (BoE) in 2025. However, the BoE is widely expected to keep rates unchanged at their meeting next Thursday.
Looking ahead to next week, the UK economic calendar is full with important releases including the jobs report, the S&P Global Flash PMIs, and that Bank of England interest rate decision. In the US, traders will be keeping a close eye on Retail Sales, housing market figures, the Federal Reserve’s own policy decisions, and their updated economic forecasts.
GBP/USD Price Forecast: Technical outlook
Even though GBP/USD has pulled back towards 1.2900 and touched a two-day low of 1.2916, it seems traders are hesitant to push it much lower. This comes after the pair successfully moved above the 200-day Simple Moving Average (SMA) at 1.2791 on March 5th. If buyers can push the price above 1.2950, the next hurdle to watch is 1.3000. On the flip side, if the price falls below 1.2900, we could see it test this week’s low of 1.2860, which is just above that 200-day SMA.
British Pound PRICE Today
Take a look at the table below to see how the British Pound (GBP) is performing against other major currencies today. It looks like the British Pound is showing the most strength against the Japanese Yen.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -0.29% | 0.14% | 0.45% | -0.34% | -0.63% | -0.86% | 0.27% | |
| EUR | 0.29% | 0.47% | 0.73% | -0.04% | -0.35% | -0.58% | 0.65% | |
| GBP | -0.14% | -0.47% | 0.25% | -0.53% | -0.81% | -1.03% | 0.18% | |
| JPY | -0.45% | -0.73% | -0.25% | -0.79% | -1.07% | -1.29% | -0.07% | |
| CAD | 0.34% | 0.04% | 0.53% | 0.79% | -0.27% | -0.52% | 0.70% | |
| AUD | 0.63% | 0.35% | 0.81% | 1.07% | 0.27% | -0.23% | 0.94% | |
| NZD | 0.86% | 0.58% | 1.03% | 1.29% | 0.52% | 0.23% | 1.23% | |
| CHF | -0.27% | -0.65% | -0.18% | 0.07% | -0.70% | -0.94% | -1.23% |
This color-coded table gives you a quick view of the percentage changes between major currencies. The currency on the left is the base currency, and the one at the top is the quote currency. For example, find British Pound in the left column, then follow that line to the US Dollar column – the percentage you see there is for GBP/USD (British Pound against US Dollar).
