GBP has remained on the offensive against the US dollar. This comes despite the series of negative UK data of late which continued this morning.
UK GDP Data Disappoints
The UK economy grew slightly, by 0.1%, between July and September 2025, which was less than the 0.2% growth market participants had predicted.
The main problem was in the industrial sector, like factories and mining, which shrank by 0.5%. Manufacturing was down, with car making hit especially hard—dropping over 10%—after a cyberattack in September caused major problems for Jaguar Land Rover. The services sector, which includes things like entertainment and real estate, did grow, but at 0.2%, it was slower than the previous quarter. Construction also saw very small growth of 0.1%, mostly from repair jobs, as new building projects actually fell. When looking at the entire year, the economy grew 1.3% compared to the same time last year, which was also slightly below forecasts.
The weak GDP number should add to rate cut expectations from the BoE in December. As you can see the most recent pricing places a 75% probability on a 25bps rate cut.
UK inflation does however remain elevated at 3.8%, which is well above the 2% target. This keeps market participants on edge and will keep eys on the Bank of England heading into December.
Market Reaction and the US Dollars Role
Cable has remained resilient since the selloff which ended on November 5, just shy of the critical 1.3000 pivot level. A sharp rally followed before a period of consolidation since Friday November 7.
Part of the reason for Cable’s rise may be attributed to the US Dollar as well as buyers defending the crucial 1.3000 pivot handle.
From the US Dollar perspective, the end of the US Government shutdown has led to some US Dollar weakness. The dollar is facing rising rate cut bets and declining haven flows as the Government shutdown appears close to being resolved.
US Dollar Index Daily Chart, November 13, 2025
This sets the stage for further GBP resilience. However, the UK budget is coming up soon and that could be keeping bulls on a leash as Chancellor Rachel Reeves faces an unenviable task.
UK Budget Ahead
Chancellor Rachel Reeves faces a significant challenge in addressing a fiscal shortfall of approximately £25 billion per year.
Her primary task is to deliver a credible, “market-friendly” budget that closes this gap without unnerving investors or adding to inflation. The Treasury is reportedly keen to avoid any tax hikes, such as on VAT, that could fuel inflation and limit the Bank of England’s scope for future rate cuts.
This forces Reeves to find a difficult balance between raising revenue, likely through measures like freezing tax thresholds and increasing bank taxes all the while implementing politically sensitive spending cuts, which markets are skeptical will be delivered. Any failure to demonstrate fiscal discipline risks a negative market reaction, undoing the recent fall in gilt yields.
Technical Analysis – GBP/USD
From a technical point of view, GBP/USD has been in consolidation since Friday, November 7.
On the four-hour timeframe, there is a red block between the 1.3180 and 1.3100 with a four-hour candle close above opening up the possibility of a move in either direction.
The overarching macro picture points to further upside but bulls may remain slightly hesitant ahead of the UK budget.
Immediate upside resistance is provided by the 100-day MA at 1.31927 before the long-term descending trendline comes into play. Beyond that we have the 200-day MA resting at 1.3300 and resistance around the 1.3333 handles to consider.
The 1.3000 handle remains key for GBP/USD, the longer it holds the more bulls may be emboldened. If the UK fails to inspire a break of that level, GBP/USD may be set to end the year higher.
GBP/USD Daily Chart, November 13, 2025
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