The GBPUSD currency pair rebounded due to robust macroeconomic data in the UK. Year-on-year GDP surged by 0.9%, the highest since October 2022, surpassing the projected 0.5% and countering the previous month’s contraction. UK’s Balance of Trade also improved from -£7.657 billion to -£4.787 billion, and year-on-year Construction Output grew from 0.3% to 4.6%, exceeding the estimated 1.9%. Additionally, Industrial Production year-on-year rose from -2.1% to 0.7%, diverging from the projected -1.1%, while Manufacturing Production year-on-year leapt by 3.7%, soaring from -0.6% to 3.1% and outshining the forecasted 0.3%. 

Meanwhile, concerns over headline inflation and weak labour market data in the US could prompt the Fed to consider a September interest rate hike, potentially negating the currency pair’s gains. Will the positive economic data prompt the Bank of England to raise rates in September, thereby bolstering the GBP? Or will uncertainty from the Fed lead to a pullback? 

Technical 

The GBPUSD currency pair is trading rangebound on the 4H Chart between the 1.26716 support and the 1.27812 resistance. Macroeconomic data boosted the currency pair to converge with the 50-day moving average, which could sustain a leg up towards the 1.27812 resistance at the 23.60% Fibonacci level.  

However, uncertainty surrounding the Federal Reserve’s interest rate path could encourage a leg down towards the 1.26716 support, which may mark a pivot point for the continuation of a downward trend if a breakdown of this support is encouraged.   

Summary 

The GBPUSD currency pair ticked up after the UK GDP grew more than expected, which could boost the price action towards the 1.27812 resistance if it surpasses the 50-day moving average. In contrast, uncertainty from the Fed could encourage a pullback towards the 1.26716 support, which may promote the continuation of a downward trend if broken down. 

Sources: TradingView, Reuters, Trading Economics