GBP/USD Forecast: Bullish Momentum Prevails Above 1.3600 as Critical UK GDP Data Looms

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GBP/USD Forecast: Bullish Momentum Prevails Above 1.3600 as Critical UK GDP Data Looms

LONDON, March 2025 – The GBP/USD currency pair maintains a bullish technical structure above the crucial 1.3600 support level as financial markets prepare for Thursday’s pivotal UK Gross Domestic Product (GDP) release. This key economic indicator will provide essential insights into the British economy’s health and potentially determine the Sterling’s trajectory through the second quarter of 2025. Market participants currently price in continued strength for the British Pound against the US Dollar, with technical analysis supporting this optimistic outlook. However, the upcoming GDP figures represent a significant fundamental catalyst that could either validate or challenge the prevailing market sentiment.

GBP/USD Technical Analysis: Bullish Structure Intact

Technical analysts observe several constructive patterns in the GBP/USD chart structure. The currency pair has established a series of higher lows since January 2025, creating a clear upward channel. Furthermore, the 50-day and 200-day moving averages maintain a bullish alignment, with the shorter-term average positioned above the longer-term one. This configuration typically signals sustained upward momentum. Additionally, the Relative Strength Index (RSI) currently reads 62, indicating positive momentum without entering overbought territory. Several key technical levels warrant close monitoring:

• Immediate Support: 1.3600-1.3620 zone (previous resistance turned support)
• Primary Resistance: 1.3750 (2025 yearly high)
• Secondary Resistance: 1.3800 (psychological level)
• Critical Support: 1.3550 (200-day moving average)

Market technicians note that sustained trading above 1.3600 maintains the bullish bias. Conversely, a decisive break below 1.3550 would signal potential trend reversal. The current price action suggests institutional accumulation, with volume patterns supporting the upward trajectory.

UK Economic Context and GDP Expectations

The United Kingdom’s economic performance has shown remarkable resilience through early 2025, defying earlier recession predictions. The Office for National Statistics (ONS) will release Q4 2024 GDP figures alongside monthly estimates for January 2025. Economists surveyed by Reuters anticipate quarterly growth of 0.3% for Q4 2024, following 0.2% expansion in Q3. Meanwhile, market consensus projects January’s monthly GDP reading at 0.2%. Several economic sectors demonstrate particular strength currently:

• Services Sector: Accounting for 80% of UK output, services show consistent expansion
• Manufacturing: Recent PMI data indicates modest recovery in factory activity
• Construction: Infrastructure projects support steady growth in this sector

Bank of England policymakers closely monitor these GDP figures as they consider future monetary policy decisions. Strong economic data could reinforce expectations for maintaining current interest rate levels, potentially supporting Sterling strength. However, weaker-than-expected numbers might revive speculation about earlier rate cuts, creating downward pressure on the currency.

Comparative Economic Performance: UK vs. US

The GBP/USD exchange rate reflects the relative economic performance between the United Kingdom and United States. Recent Federal Reserve communications suggest a cautious approach to monetary policy adjustments, with Chair Jerome Powell emphasizing data dependency. Meanwhile, the Bank of England maintains a similarly cautious stance, creating a balanced policy divergence landscape. The following table illustrates key economic comparisons:

These comparative metrics highlight why the GBP/USD pair remains sensitive to relative economic performance. The upcoming UK GDP data will provide fresh evidence for this ongoing comparison.

Market Sentiment and Positioning Analysis

Commitment of Traders (COT) reports reveal that speculative positioning in GBP futures remains net long, though not at extreme levels. This suggests room for additional bullish positioning if the GDP data supports continued Sterling strength. Meanwhile, options market analysis indicates balanced risk perceptions, with implied volatility slightly elevated ahead of the data release. Several sentiment indicators currently support the bullish GBP/USD outlook:

• Risk Reversal Skew: Slightly favors GBP calls over puts
• FX Volatility Index: Moderate readings suggest controlled expectations
• Institutional Flows: Net GBP buying observed in recent weeks

Market participants generally expect the Bank of England to maintain higher interest rates for longer than previously anticipated, providing fundamental support for the currency. However, this expectation depends heavily on continued economic resilience, making the GDP release particularly significant.

Historical GBP/USD Reactions to GDP Data

Historical analysis reveals that GBP/USD typically experiences increased volatility around GDP releases, with average daily ranges expanding by approximately 40% on announcement days. The direction of movement depends on both the actual data and how it compares to market expectations. Over the past two years, positive GDP surprises have generated average GBP/USD gains of 0.8% on announcement day, while negative surprises have produced average declines of 1.2%. However, the market’s reaction also considers revisions to previous data and forward-looking components within the GDP report.

Broader Market Context and Correlations

The GBP/USD exchange rate maintains important correlations with other financial instruments. Notably, the pair shows positive correlation with global equity indices, reflecting Sterling’s status as a growth-sensitive currency. Additionally, the currency pair demonstrates inverse correlation with the US Dollar Index (DXY), though this relationship has weakened somewhat in 2025. Several global factors currently influence GBP/USD dynamics:

• Commodity Prices: Oil and natural gas prices impact UK trade balance
• Global Risk Sentiment: Improving risk appetite supports Sterling
• Brexit Developments: Steady implementation of trade agreements reduces uncertainty

Furthermore, seasonal patterns suggest that GBP/USD typically experiences strength during the second quarter, adding another supportive factor to the current technical and fundamental picture.

Conclusion

The GBP/USD forecast maintains a bullish bias above the critical 1.3600 support level, supported by constructive technical patterns and resilient UK economic fundamentals. However, Thursday’s GDP release represents a significant catalyst that could either validate or challenge this optimistic outlook. Market participants should monitor both the headline GDP figures and the underlying components, particularly services sector performance and business investment data. Technical analysis suggests that sustained trading above 1.3600 maintains upward potential toward 1.3750 resistance, while a break below 1.3550 would signal potential trend reversal. The GBP/USD outlook ultimately depends on the delicate balance between UK economic resilience and comparative US performance, making comprehensive analysis essential for informed trading decisions.

FAQs

Q1: What time is the UK GDP data released?
The Office for National Statistics releases UK GDP data at 7:00 AM GMT (2:00 AM EST) on the scheduled announcement date.

Q2: How does GDP data affect the British Pound?
Stronger-than-expected GDP growth typically supports the British Pound by suggesting economic resilience and potentially higher interest rates, while weaker data can pressure the currency.

Q3: What other economic indicators should traders watch alongside GDP?
Traders should monitor inflation data, employment figures, PMI surveys, and retail sales to gain comprehensive understanding of UK economic health.

Q4: What is the current Bank of England interest rate?
As of March 2025, the Bank of England maintains its policy rate at 5.25%, following a series of hikes to combat inflation.

Q5: How does US economic data influence GBP/USD?
US economic indicators, particularly Federal Reserve policy decisions and inflation data, significantly impact GBP/USD as they affect the relative strength of the US Dollar component of the pair.

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