The British pound is entering a critical phase as traders weigh slowing UK economic data against the possibility of upcoming rate cuts from both the Bank of England and the Federal Reserve in December. Recent figures point to softer growth and easing inflation in the UK, while retail sales and business activity suggest consumers and companies are becoming more cautious. Against this backdrop, GBP/USD has seen a mild rebound but remains range-bound, with market sentiment hinging on central bank signals and upcoming data releases that could determine the pair's next decisive move.
Pound Balances Between Weak Data and Rate Cut Expectations
The British pound is entering a critical phase as traders weigh slowing UK economic data against the possibility of upcoming rate cuts from both the Bank of England and the Federal Reserve in December. Recent figures point to softer growth and easing inflation in the UK, while retail sales and business activity suggest consumers and companies are becoming more cautious. Against this backdrop, GBP/USD has seen a mild rebound but remains range-bound, with market sentiment hinging on central bank signals and upcoming data releases that could determine the pair's next decisive move.
Technical Outlook for GBP/USD
Since bottoming at 1.30095 on November 4, GBP/USD has staged a modest recovery of roughly 0.9%, as broad-based U.S. dollar strength begins to fade. A clear break above the recent peak at 1.32153, coupled with a higher trough at 1.30372, would confirm a bullish chart reversal—often referred to as a bullish failure swing—potentially signaling the start of a short-term upward trend.
For now, however, the broader technical outlook remains bearish, characterized by a pattern of lower highs and lower lows. Price action continues to trade below both the 20- and 50-period Exponential Moving Averages (EMAs), suggesting sellers still maintain control. Momentum indicators also support this view: the Relative Strength Index (RSI) remains below the 50 threshold, and the Momentum Oscillator is holding under the 100 line, both reinforcing prevailing downside sentiment.
Currently, the pair is hovering slightly above the weekly pivot point at 1.31282, attempting to build momentum for a potential breakout. A sustained move above resistance at 1.32153 would open the way toward 1.33388 and 1.34307. On the downside, immediate support is seen at 1.30095, with further levels at 1.29550 and 1.28729 if selling pressure resumes.
UK Economic Growth Stalls as Services Slow and Inflation Eases
UK business activity slowed in November as growth in the private sector lost momentum, mainly because of weaker demand in the services sector. The S&P Global Flash UK Composite PMI slipped to 50.5 from 52.2 in October, showing that the economy is still growing but at a much slower pace. Service companies reported fewer new orders for the first time since July, as both businesses and consumers became more cautious ahead of the Autumn Budget. On the other hand, manufacturers saw a small but welcome rise in new orders, their first increase in over a year, thanks to stronger domestic demand.
Inflation pressures continued to ease, with companies raising prices at the slowest rate in nearly five years as competition intensified and demand softened. However, costs went up again due to higher wages and a weaker pound. Many businesses also cut jobs at the fastest rate in four months, choosing to delay hiring or invest in technology instead to keep expenses down.
Overall, the figures suggest the UK economy has stalled, with growth likely flat in November and only a slight pickup expected in the final quarter of the year. While easing price pressures may reduce inflation worries, weaker demand and falling business confidence show that economic challenges are far from over, potentially strengthening the case for a Bank of England rate cut in December.
UK Retail Sales Dip as Shoppers Wait for Black Friday Deals
UK retail sales rose over the three months to October 2025, but monthly figures show signs of slowing as shoppers held back ahead of major discount events. Sales volumes increased by 1.1% over the three-month period compared with the previous three months, driven mainly by strong demand for clothing and tech products in September and October.
However, in October alone, retail sales fell by 1.1%, marking the first monthly drop since May. The decline followed gains of 0.7% in September and 0.5% in August. Supermarkets, clothing stores, and online retailers all saw weaker sales during the month, with many retailers suggesting that customers were postponing purchases in anticipation of Black Friday deals. Overall, the data points to steady spending in the autumn months but a temporary pause in October as consumers waited for bigger discounts.
Pound Steady as Markets Await Key December Rate Decisions
The outlook for the British pound against the U.S. dollar looks fairly balanced at the moment. Both the Bank of England and the Federal Reserve are keeping interest rates around 4%, so there's little difference driving the currency pair one way or the other. The pound's direction will depend largely on upcoming UK data, especially inflation and growth numbers, which could influence the Bank of England's December 18 policy decision. In the U.S., investors will watch the Federal Reserve's December 9–10 meeting for signs of a possible rate cut. If U.S. inflation and job growth continue to cool, the dollar could weaken as markets anticipate lower rates in 2026. For now, GBP/USD is likely to stay within a steady range, with a chance to rise if the UK economy shows signs of stability and risk sentiment improves. However, any renewed economic weakness or market uncertainty could keep pressure on the pound.