British Pound moves away from two-month low after UK Q2 GDP as USD retreats ahead of PCE
The GBP/USD pair attracts some buyers during the early European session on Wednesday and moves away from a two-month low, around the 1.3200 mark touched the previous day.
The British Pound (GBP) regained momentum in early European trading on Wednesday, moving beyond a two-month low of approximately 1.3200, reaching the 1.3260 range. This surge occurred following the release of the final United Kingdom gross domestic product (GDP) figure for the second quarter of 2026. The Office for National Statistics (ONS) announced a revision in the GDP growth rate, now estimated at 0.5% instead of the initially reported 0.4%.
The upgraded GDP data bolstered expectations for a 25-basis-point (bps) rate hike by the Bank of England (BoE) during their upcoming meeting on November 5, contributing to the GBP's rise. Meanwhile, the US Dollar (USD) experienced a retreat, influenced by decreasing US bond yields, a drop in crude oil prices to a three-week low, and dovish comments from New York Federal Reserve (Fed) President John Williams.
Williams stated that the Fed should not rush its next policy move. Additionally, the US Consumer Confidence Index dropped to its lowest level since May 2014, leading to profit-taking in the USD. However, the likelihood of further US Dollar gains could be constrained by hawkish Federal Reserve expectations, as traders await key macroeconomic data before deciding on further moves.
Geopolitical tensions between the US and Iran may continue to bolster the USD as a safe-haven currency, suggesting some caution for investors considering bullish positions on the GBP/USD pair. The upcoming US Personal Consumption Expenditures (PCE) Price Index and the final Q2 GDP print are expected to influence the USD later in the North American trading session, while the US Nonfarm Payrolls (NFP) report will dominate the market on Friday.
The GBP/USD pair currently holds a bearish outlook below the 200-day Simple Moving Average (SMA), indicating that any upward movement may encounter resistance before reaching the 1.3300 level. A significant move above this level could trigger a short-covering rally, potentially driving the GBP/USD pair to higher levels. Conversely, a breach of the 1.3200 mark could initiate a decline towards the year-to-date low of around 1.3140 and the 1.3100 round figure, which, if surpassed, could prolong the recent downtrend.
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