The Pound-Dollar exchange rate is holding below $1.35 after resilient UK GDP data, with Sterling unable to make significant headway against a broadly steady US Dollar.
The Pound to US Dollar (GBP/USD) exchange rate remained under modest pressure on Thursday morning despite stronger-than-expected monthly UK growth data.
At the time of writing, GBP/USD was trading around $1.3481, down approximately 0.12% on the day after touching an intraday high just above $1.3500.
DAILY RECAP
The Pound received some support after the Office for National Statistics reported that the UK economy expanded by 0.4% during the second quarter.
The quarterly increase matched consensus forecasts and represented a slowdown from 0.6% growth during the opening three months of 2026.
The more encouraging element came from the monthly figures, with GDP increasing 0.3% in June compared with expectations for no growth.
May’s estimate was also revised to show that the economy was unchanged rather than expanding 0.1%.
Services provided the main support during June, recording a 0.4% increase as activity benefited from the temporary Gulf ceasefire, the start of the World Cup and favourable weather.
The figures indicated that the UK economy remained relatively resilient during the first half of 2026, although there are still concerns that momentum will weaken during the second half of the year.
The US Dollar has resisted further selling pressure despite investors cutting expectations for another Federal Reserve interest-rate increase.
US headline inflation slowed from 3.5% to 3.4% in July, while core inflation eased from 2.6% to 2.5%.
Markets subsequently reduced the implied probability of a September Federal Reserve rate increase to around 40%, compared with 54% before the inflation release.
Nevertheless, the Dollar index remained close to the 100 level on Thursday morning.
The US currency has continued to attract some defensive demand amid renewed uncertainty surrounding the Middle East, limiting the ability of GBP/USD to capitalise on the more favourable interest-rate backdrop.
Near-Term GBP/USD Forecast: $1.35 Remains Key Resistance
The latest UK GDP data should offer Sterling some protection, particularly as the stronger June reading reduces immediate fears of a sharp economic slowdown.
However, the muted GBP/USD reaction suggests that much of the resilience in UK activity was already reflected in market expectations.
The $1.3500 level remains the immediate barrier for GBP/USD.
A sustained move above this level would bring this week’s highs around $1.3540 back into focus, followed by $1.36 if Dollar sentiment deteriorates further.
Conversely, failure to regain $1.35 could encourage renewed selling, with initial support around $1.3450 followed by the $1.3420 area.
Attention will now turn back towards the United States, with retail sales and consumer sentiment data likely to influence expectations surrounding the Federal Reserve.
Further evidence of weaker US demand could reduce September rate-hike expectations again and give GBP/USD another opportunity to challenge $1.35.
Stronger US data, however, would reinforce the Dollar’s current resilience and leave Sterling vulnerable to further modest losses.
