Insights 
VT 
Key Points
- GBP/USD steadies after UK GDP rebounds stronger than forecast.
- BoE rate cut expectations ease slightly but remain front-loaded.
The pound pared earlier losses against the US dollar on Wednesday, holding near the 1.34 handle after UK economic growth exceeded expectations. The data provided near-term support for sterling, helping GBP/USD stabilise after recent volatility.
UK GDP rose 0.3% month-on-month in November, rebounding from a 0.1% contraction in October and comfortably beating forecasts for a modest 0.1% increase.
On a rolling three-month basis, output expanded 0.1%, defying expectations for a contraction and easing concerns that the economy is slipping into stagnation.
BoE Rate Expectations Adjust at the Margins
The stronger growth print has prompted a modest recalibration of interest rate expectations. Markets are now pricing in roughly 46 basis points of easing by year-end, slightly less aggressive than before the data release.
A first-rate cut from the Bank of England remains fully priced by mid-year, with traders assigning a high probability to an initial move as early as April.
However, expectations for follow-up cuts later in the year have softened marginally, reflecting improved confidence in near-term economic momentum.
The repricing has helped limit downside pressure on sterling, though it has not been sufficient to drive a sustained breakout higher.
Technical Analysis
GBP/USD is showing signs of consolidation after a strong rebound from the 1.30095 low in November.
The pair has been struggling to stay above the 1.34500 level, with recent candles signalling indecision. The short-term moving averages (5, 10, 30) are starting to flatten, indicating a possible pause in bullish momentum.
The MACD has rolled over into a bearish crossover, with the histogram below zero and widening—suggesting fading upside strength.
Price is holding just above the 30-day MA for now, but momentum appears to be slowing near-term.
Near-Term Outlook
Sterling’s resilience reflects a balance between firmer domestic data and the reality that rate cuts remain firmly on the horizon.
Further upside in GBP/USD will likely require additional evidence that UK growth can remain resilient without prompting the BoE to accelerate easing.
Until then, the pair appears set to remain range-bound, with incoming inflation data and central bank communication shaping the next directional move.
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