Strong US GDP fails to dent British Pound as BoE rate hike bets underpin Cable

• 0.19% rise takes GBP/USD to 1.3340 despite firm US economic figures.
• 3.4% US GDP growth accompanies Core PCE inflation of 3.1%.
• 81% probability of December Fed tightening priced in alongside a November BoE rate increase.

GBP/USD is up 0.19% at 1.3340. Sterling strengthens against the US Dollar on Thursday despite robust US economic releases, with GDP beating forecasts, inflation climbing and the labour market remaining strong.

GBP/USD rises: strong US growth and elevated Core PCE fail to deter gains ahead of next week's expected BoE rate increase

At 3.4% YoY, the preliminary US Gross Domestic Product (GDP) reading beat the 3.2% forecast and Q2's 2.2%. Consumer spending also remained strong, accelerating to 3.6% YoY from the previous 3.4% reading and signalling an economy gathering pace.

Inflation is rising alongside economic activity. Annual growth in the Core Personal Consumption Expenditures (PCE) Price Index, the Fed's preferred inflation measure, matched expectations at 3.1% YoY. That strengthened the argument for additional tightening by the US central bank after its decision on Wednesday to leave rates unchanged.

Meanwhile, jobless claims fell to 194K from 195K in the week ending 24 October. The reading was below forecasts for an increase to 199K.

Following the releases, traders assigned an 81% probability to a 25-basis-point Fed rate increase at the 9 December meeting, raising the odds of a hike.

UK traders assessed Finance Minister John Healey's budget. He outlined plans to raise rates on banks, gambling, savers, landlords and online shopping, while also preparing measures to address 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: Technical resistance limits recovery

At 1.3368 on the daily chart, GBP/USD retains a slightly bearish bias. Spot remains below the simple moving average cluster near 1.3385 and descending trend-line resistance at 1.3393. Although the pair has recovered from recent lows, with the Relative Strength Index (14) reading of 54.4 suggesting stronger momentum, the broader price structure remains constrained. Former rising support lines near 1.3652 and 1.3830 now act as resistance above the market, pointing to a limited recovery rather than an established bullish trend.

The simple moving average cluster near 1.3385 forms the first upside barrier, with descending trend-line resistance close behind at 1.3393. A sustained move through both would clear the way towards 1.3652 and 1.3830, where former upward-sloping support lines now provide resistance. Below the market, the closest significant demand area lies around 1.3253, the earlier breakout point through descending trend-line resistance. Buyers could seek to cushion a corrective retreat there.

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