Insights 
VT 
Key Points:
- GBP/USD rises to $1.329 after Q1 GDP beats expectations at 0.7% q/q and 1.3% y/y.
- Market pares back aggressive BoE rate cut bets; dollar softness adds tailwind.
Sterling climbed to $1.329 on Thursday, building on gains after stronger-than-expected UK GDP figures signalled economic resilience and cooled market speculation of deeper Bank of England (BoE) easing in the months ahead.
Quarterly growth registered 0.7%, outpacing economist forecasts closer to 0.4%. Year-on-year, GDP expanded 1.3%, painting a rosier picture than recent concerns of stagnation or contraction. The data provided a timely lifeline for sterling, lifting it from an earlier session low of $1.3248.
Technical Analysis
Sterling staged a recovery after a steep correction from the 1.3360 peak, finding intraday support near 1.3248 before reclaiming ground above the 1.3280 mark. The pair is showing signs of short-term stabilisation, with a mild bullish crossover on the MACD and momentum gradually shifting back in favour of buyers.
Picture: GBP/USD rebounds from 1.3248 floor, but must clear 1.3305 to challenge bullish momentum, seen on the VT Markets app
Despite the earlier breakdown below the moving averages, the price has now breached back above the 5- and 10-period MAs, indicating a potential shift in sentiment. Still, the 30-period MA remains overhead resistance near 1.3300, which needs to be cleared for continued upside.
If bulls manage to reclaim 1.3305, a retest of the 1.3360 high becomes viable. However, a drop back below 1.3260 would likely see fresh selling pressure resume.
Bank of England Weighs Cuts
The GDP print has led traders to temper their expectations for how far the BoE might cut interest rates this year. While a single quarter-point cut is still priced in, the case for more aggressive easing has weakened.
Meanwhile, the pound also benefited from a broader decline in the US dollar. Markets continue to speculate that the US may aim for a weaker currency in ongoing trade negotiations—a stance that could give foreign currencies like the pound and euro more room to rise.
However, the UK data wasn’t uniformly strong. Unemployment edged higher, and wage growth softened slightly—hinting at possible underlying slack in the labour market. Still, traders appear more focused on the positive GDP narrative, at least in the short term.
Cautious Forecast
Sterling may attempt to retest the $1.3360 high if risk sentiment holds and dollar softness persists. However, any signs of BoE dovishness or poor upcoming labour market data could see GBP/USD return toward the 1.3240–1.3250 range. Volatility is likely to remain elevated ahead of next week’s UK CPI print.
