GBP/USD: Sterling Trips Over Weak UK GDP Data to Float Near 50-Day SMA. What’s Next?

Tariff jitters are helping to keep the dollar well-bid while its UK peer tanked on the second straight month of declining GDP growth.

📉 UK Growth Tanks… Again

• The GBPUSD pair stumbled 0.3% early Friday to hover near $1.3530, its lowest stretch this week. The move puts the pound floating dangerously close to its 50-day simple moving average at $1.3493 — a line that could flip from support to trouble if this weak trend continues.
• Friday’s fresh GDP figures helped hesitating sterling bears to hit the sell button: the UK economy unexpectedly shrank by 0.1% in May, marking its second straight month of contraction. That’s a miss against analyst forecasts calling for a mild rebound.
• The backdrop: the British economy is still struggling to digest domestic tax hikes plus the ongoing drag from Trump’s new tariffs, which have rattled supply chains and business spending.

🤫 BoE on the Clock

• In this context, the Bank of England is walking a tightrope. It’s already trimmed rates from 5.25% to 4.25% over the past year — far slower than the European Central Bank, which has by now slashed its main rate from 4% to 2%.
• Friday’s soft GDP print just added more fuel to bets that the BoE could pull the trigger on another rate cut sooner rather than later. Money markets now price an 80% chance of a cut at the August meeting.
• Sterling bulls are asking: Will the BoE get more aggressive if the economy keeps contracting? Or does the inflation backdrop keep them stuck in “slow and steady” mode?

☕ Next Moves for Cable

• On the other side of the trade, the US dollar remains well-bid as traders brace for more fallout from renewed tariff threats. The White House’s August 1 deadline to lift the “pause” on its reciprocal tariffs has global FX markets on edge.
• A stronger buck and a shaky UK outlook are a bad combo for the pound — if UK GDP stays soggy, sterling could lose its grip on that 50-day SMA and drift toward deeper technical support near $1.3450.
• In the meantime, the big level to watch is the $1.3490. Break below it — and cable could be in for a rough rest of the summer (especially if those lofty tariffs keep swaying the mood over at FX town).