The GBP/USD currency pair surged by 0.6% on Thursday, trading around the 1.3550 level, following two key macroeconomic events: the Bank of England (BoE) holding its interest rate steady at 3.75% with an 8-1 vote, and the release of lower-than-expected US GDP growth data. The BoE's decision was widely anticipated by markets, but Governor Andrew Bailey's comments were interpreted as broadly hawkish. Bailey stated that it is 'reasonable' to keep rates at 3.75% given the UK's economic situation and ongoing uncertainty in the Middle East, while cautioning that 'it would be a mistake to wait before second-round effects before acting' [1].
In the United States, the Department of Labor reported that initial jobless claims fell to 189,000 for the week ending April 25, marking the lowest level in nearly six decades. This figure beat expectations, as the consensus was for claims to remain steady at 215,000, the previous week's revised level (up from 214,000) [1]. Additionally, the Personal Consumption Expenditures (PCE) Price Index, the Federal Reserve’s preferred inflation measure, rose to 3.5% year-over-year in March from 2.8% in February, matching market expectations. On a monthly basis, the PCE Price Index increased by 0.7% [1].
Despite the positive jobless claims and in-line PCE inflation data, the US economy's preliminary Q1 Gross Domestic Product (GDP) growth came in at an annualized rate of 2%, falling short of the 2.3% expected by analysts. This weaker GDP print was a key factor supporting the GBP/USD rally [1].
From a technical perspective, GBP/USD traded at 1.3556, maintaining a constructive near-term bullish bias as it remained above both the 20-period Simple Moving Average (SMA) at 1.3513 and the 100-period SMA at 1.3501. The Relative Strength Index was around 61, indicating firm but not overstretched upside momentum, with immediate resistance at 1.3561 and initial support at 1.3535 [1].
CONCLUSION
The GBP/USD pair advanced on the back of a dovish US GDP surprise and a steady, yet hawkish-leaning, BoE policy stance. While US jobless claims and inflation data were supportive, the GDP miss drove market sentiment, resulting in a constructive outlook for GBP/USD in the near term.