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GBP/USD steadies after stronger UK GDP data

GBP/USD is holding steady around the 1.3440 level amid a stronger USD and after the UK economy expanded by more than expected in November.

Latest data from the Office for National Statistics showed that the UK economy grew 0.3% month-on-month in November, a rebound from a 0.1% contraction in October. This was also ahead of the 0.1% forecast and marked the strongest monthly reading since June.

Delving deeper into the figures, GDP was boosted by a 0.3% expansion in services and a 2.1% increase in manufacturing, as car production normalised following a cyber incident at Jaguar Land Rover. The UK economy grew despite uncertainty in the run-up to the budget, which is encouraging. With the worst uncertainty behind businesses, growth momentum could continue in the coming months.

The data gives Bank of England hawks sufficient reason to delay voting to ease money policy again soon, making a rate cut in February less likely. Traders have kept expectations for a Bank of England rate cut unchanged, with a 25 basis point reduction fully priced in for June.

The USD is rising modestly on Wednesday as investors weigh the outlook for Fed rate cuts, Fed independence, and ongoing geopolitical uncertainties.

PPI and retail sales data yesterday came in stronger than expected, but they failed to shift rate-cut expectations.

Concerns about Fed independence were in the spotlight at the start of the week amid speculation that a DoJ investigation into Fed Chair Powell was intended to pressure the central bank to lower rates more aggressively. Trump has calmed these fears, saying that he has no plans to fire Powell.

Attention will now turn to US trade data and jobless claims for further clues into the health of the US economy and the outlook for rates. The market is expecting the Fed to leave rates unchanged in January, with the next rate cut fully priced in by June.
 

GBP/USD forecast – technical analysis

GBP/USD’s recovery from the 1.31 November low ran into resistance above 1.3550, before easing lower.  The pullback found support at around 1.34, the 200 SMA, and horizontal support, keeping the uptrend intact for now.

Sellers would need to break below the 1.34 level to create a lower low towards 1.3350. A break below here could spark a deeper selloff to 1.3250.

Buyers will look to rise above 1.35 resistance to open the door to 1.3550 and create a higher high.
 

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Oil prices fall amid easing fears of US military action in Iran.

Oil prices are falling 3% in early trade after President Trump said that the killing has stopped in Iran, easing concerns of imminent military action in the country.

Strikes could have threatened Iranian crude oil output and key shipping routes, thereby significantly lifting the geopolitical risk premium. Oil prices had rallied 10% in just five days.

As the risk premium fades, oil prices are falling around 3%; however, regional tensions remain elevated.

Elsewhere, Venezuela has restarted oil exports, reversing oil production cuts made under a US embargo.

Further weighing on US crude and oil prices was data showing that oil and gasoline inventories rose more than expected last week. The EIA report shows crude stockpiles rose by 3.4 million barrels, ahead of expectations for a 1.7 million-barrel draw.

On the demand side, OPEC said oil demand is likely to rise at a similar pace in 2027 as in 2026, pointing to a balance between supply and demand that contrasts with other forecasts of a major oil supply glut.

China's crude oil imports rose 17% from a year earlier, with the total 2025 imports rising 4.4% according to government data.
 

Oil forecast - technical analysis

Oil broke out of the falling channel, rising to 62.35, the 200 SMA, and the late October high. The price has now eased lower and is testing support at 60.00, the round number. A break below here brings 58.50 into focus, the upper band of the falling channel, and the 50 SMA.

Buyers would need to rise above the 62.35/50 resistance zone to create a higher high and bring 65,00 into focus.
 

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