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Market Insights > Daily Market Analysis New

GBP/USD Holds Firm as UK Growth Outperforms and US Data Weakens

Published: 17 August 2026,09:04

Daily Market Analysis New

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BoE
Pound

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Key Takeaways:

*GBP/USD remains supported by stronger UK growth and a softer US dollar

*UK GDP expanded 0.4% in Q2, keeping Britain on track for strong G7 growth momentum

*Weak US retail sales, CPI, PPI, and jobs data pressured Treasury yields lower

*Fed rate-hike expectations eased, while markets still price at least one BOE hike this year

Market Summary:

The Pound Sterling remained firm as a weaker US dollar and stronger-than-expected UK economic growth continued to support GBP/USD. The pair benefited from a clear macro divergence, with the UK economy showing relative resilience while recent US data pointed to softer momentum.

The UK economy expanded 0.4% in Q2, following 0.6% growth in Q1, putting Britain on course for one of the strongest growth performances among G7 economies during the first half of 2026. This resilient growth outlook has supported market expectations that the Bank of England may still deliver at least one more rate hike this year.

At the same time, the US dollar remained under pressure as several key US economic reports came in weaker than expected. Core Retail Sales fell 0.3%, missing expectations for a 0.2% increase, while headline Retail Sales dropped sharply from 0.2% previously to -0.6%, below market expectations of 0.1%.

The weak retail sales figures added to a broader trend of softer US data, following earlier signs of easing inflation from CPI and PPI reports, as well as slower labour-market momentum. This has pushed US Treasury yields toward multi-week lows and reduced expectations that the Federal Reserve may need to tighten monetary policy aggressively in the near term.

For GBP/USD, this creates a more supportive backdrop. While the pound is being lifted by stronger UK growth and BOE rate-hike expectations, the dollar is being pressured by weaker US data, lower yields, and fading Fed tightening bets.

Overall, GBP/USD remains supported as long as UK data continues to show resilience and US economic momentum remains soft. Moving forward, traders will closely monitor upcoming US inflation, labour-market data, and BOE policy signals to assess whether the pair can extend its upside momentum.

Technical Analysis

GBP/USD, H4:

GBP/USD is trading higher after rebounding from the 1.3490 support level, signaling improving short-term bullish momentum.

Momentum indicators remain supportive, with the MACD showing increasing bullish momentum and the RSI at 65 staying above the midline, suggesting that buying pressure remains intact.

If bullish momentum persists, the pair could extend gains toward the next resistance level at 1.3595, followed by 1.3730 if upside momentum strengthens.

However, if bullish momentum fails to sustain, GBP/USD may experience a short-term technical correction and retest the 1.3490 support level, with further downside toward 1.3395 if selling pressure increases.

Resistance Levels: 1.3595, 1.3730

Support Levels: 1.3490, 1.3395

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GBP/USD Holds Firm as UK Growth Outperforms and US Data Weakens

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