• The GBP/USD forecast remains supported despite downbeat UK GDP data.
• Cooler US CPI and tariff uncertainty keep the dollar weaker.
• Market participants are now eyeing US PPI and unemployment claims data due today.

The GBP/USD forecast remains broadly bullish amid the dollar’s weakness. However, today’s UK GDP data reported by the ONS showed economic contraction faster than expected. On Wednesday, the price saw a significant rise near 1.3600 as the US CPI reported softer-than-expected, raising concerns for the Fed’s “higher for longer” policy.

The British pound slipped from the daily highs above 1.3580 towards the 1.3525 area before finding a renewed strength. The pair is trading at 1.3580 at the time of writing.

The UK GDP was expected to shrink -0.1% against the previous reading of 0.2% for March. However, the figures came at -0.3% for April, missing estimate, putting the pound under pressure. The ONS reported that the sharp fall in the GDP is attributed to the reduced goods exports to the US. The last four months reported consecutive rises in the economy, while April saw the largest monthly fall.

The higher-than-projected decline in the UK economy combined with the rising unemployment may force the Bank of England to continue with easing policy. In May, the bank had opted for the gradual and careful easing by slashing the rates by 25 bps to 4.5%. These economic shocks may increase the speculation of BoE’s more rate cuts.

On the other side of the equation, the US dollar remains weak on Thursday as President Trump threatened to send the letters to the countries not negotiating in good faith to accept his imposed tariffs.
 

Key Events Ahead

• US PPI
• US Unemployment Claims
   

GBP/USD technical forecast: Broad consolidation within uptrend

(Click on image to enlarge)

GBP/USD 4-hour chart

The GBP/USD daily chart shows a strong bullish trend as the price moves north within the uptrend. The pair remains strongly supported by the 20-day SMA. However, the pair shows consolidation within the range of 1.3480 to 1.3616. The 14-day RSI is at 60.0, which shows the pair is not overbought yet and has a tendency to gain further.

Alternatively, breaking the 20-day SMA may gather strong selling traction, and the price may slip towards the lower boundary of the channel at 1.3270 ahead of 1.3200.

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