The GBP/USD pair climbed past 1.2450 on Tuesday, as traders positioned ahead of the UK GDP report, which could provide fresh clues on the economy’s resilience. With recession risks still looming, investors are closely watching whether growth figures will influence the Bank of England’s (BoE) next policy steps.
Despite ongoing concerns over economic stagnation, the pound found support as markets speculated on potential surprises in the GDP print. A stronger-than-expected reading could reinforce expectations that the BoE will maintain a restrictive stance, while weaker data may fuel speculation of eventual rate cuts.
Sterling has struggled in recent weeks as signs of a slowing economy and softer inflation weighed on sentiment. Meanwhile, the U.S. dollar remains firm, underpinned by steady Treasury yields and expectations that the Federal Reserve will keep interest rates elevated for longer to combat inflation.
The UK’s growth data comes at a crucial moment for policymakers, who have signaled caution in adjusting rates too soon. While inflationary pressures have eased, concerns about sluggish demand and slowing consumer spending continue to cloud the outlook. Any unexpected deviation in GDP figures could lead to sharp moves in GBP/USD as traders recalibrate their rate expectations.
Broader market sentiment remains mixed, with investors weighing the potential for BoE policy shifts against global economic headwinds. The pound’s recent recovery suggests some optimism, but sustained upside could depend on whether UK data signals resilience or further economic weakness.
Should GDP figures surprise to the upside, sterling may extend gains, challenging key resistance levels. Conversely, a weaker print could see the pound retreat, as rate-cut speculation gains traction and traders turn toward the dollar as a safer bet. For now, markets remain cautious, awaiting the economic data that could set the tone for GBP/USD in the coming sessions.
