The British pound fell to a near two-month low against the U.S. dollar, trading at 1.2650 ahead of the UK’s monthly GDP data release. The depreciation comes as market participants brace for potential signs of economic slowdown in the UK’s key growth metrics. The currency pair had previously held steady above 1.2700, but recent economic concerns have weighed heavily on investor sentiment.
Traders are focused on the upcoming GDP report, which is expected to provide further clarity on the economic trajectory. Weak growth in the UK could prompt more cautious forecasts from the Bank of England, potentially leading to a further softening of the pound in the coming weeks. The UK has faced a challenging economic environment, with inflationary pressures and sluggish growth dampening confidence.
While the U.S. dollar has benefited from resilient economic data and an upbeat Federal Reserve outlook, the pound’s weakness is also a reflection of broader global economic uncertainty. Expectations of a slowdown in the UK’s economy have led to a reassessment of interest rate expectations, with markets now pricing in less aggressive tightening from the Bank of England.
As investors wait for the GDP release, the currency market remains on edge, and the direction of the pound will likely depend on whether the data confirms the fears of a fragile recovery. Any negative surprises could push the pound even lower, potentially testing the 1.2600 level.
