Why is the British Pound resisting strong US GDP as BoE rate hike bets underpin Cable?

• GBP/USD rises 0.19% to 1.3340, shrugging off stronger US economic readings.
• Core PCE inflation hits 3.1% alongside US GDP growth of 3.4%.
• A November BoE rate increase is priced in, while the probability of December Fed tightening climbs to 81%.

The Pound Sterling strengthens against the US Dollar on Thursday, taking GBP/USD to 1.3340, a gain of 0.19%. The advance comes despite firm US economic readings, with GDP beating expectations, inflation increasing and the labour market remaining robust.

Can GBP/USD extend gains ahead of next week’s expected BoE rate hike despite firm US growth and high Core PCE?

US economic activity showed signs of gathering pace as the preliminary Gross Domestic Product (GDP) reading came in at 3.4% YoY, ahead of the 3.2% forecast and Q2’s 2.2%. Consumer spending also remained resilient, rising 3.6% YoY compared with the previous reading of 3.4%.

Inflation is climbing alongside the expanding economy. At 3.1% YoY, the Core Personal Consumption Expenditures (PCE) Price Index, the Fed’s preferred inflation measure, matched expectations. The reading strengthened the case for additional tightening by the US central bank after its decision to leave rates unchanged on Wednesday.

Separately, jobless claims fell to 194K from 195K in the week ending 24 October, coming in below the forecast rise to 199K.

Following the data, the likelihood of a Fed rate increase at the 9 December meeting rose, with traders assigning an 81% probability to a 25-basis-point hike.

UK traders, meanwhile, assessed Finance Minister John Healey’s budget. He said he would increase rates on banks, gambling, savers, landlords and online shopping, while also planning measures to tackle high energy prices.

Attention among GBP/USD traders also turns from the budget to next week’s Bank of England (BoE) policy meeting. According to Prime Terminal, markets have priced in a 25-basis-point increase in November, followed by another next February.

GBP/USD Price Forecast: Can the recovery clear technical resistance?

A mildly bearish bias persists on the daily GBP/USD chart, where the pair trades at 1.3368 below a cluster of simple moving averages around 1.3385 and descending trend-line resistance at 1.3393. Although prices have recovered some ground from recent lows and the Relative Strength Index (14) reading of 54.4 suggests momentum is improving, the wider technical structure remains constrained. Former rising support lines near 1.3652 and 1.3830 now act as resistance above the price, suggesting a limited recovery rather than an established bullish trend.

For the recovery to progress, GBP/USD first faces the simple moving average cluster around 1.3385, with the descending trend-line resistance close behind at 1.3393. A sustained move above both would clear the way towards 1.3652 and 1.3830, where former upward-sloping support lines now provide resistance. Should prices retreat, the closest significant demand area lies around 1.3253, at the earlier breakout through a downward-sloping resistance trend line; buyers could try to cushion a corrective decline there.

(The technical analysis of this story was written with the help of an AI tool. Know more.)