GBP/USD Price Analysis – April 23, 2025
Daily Price Outlook
During the mid-European session on Wednesday, the GBP/USD pair faced renewed downside pressure, slipping below the 1.3300 mark following disappointing UK PMI figures.
However, the British Pound struggled to find support after weak data fueled fears of an economic slowdown and raised the likelihood of a Bank of England (BoE) rate cut at the May meeting.
Meanwhile, the US Dollar remained volatile as markets reacted to mixed signals surrounding trade policy and Federal Reserve expectations.
GBP/USD Falls After UK PMI Miss and Services Sector Weakness
On the data front, the latest UK S&P Global/CIPS PMI data triggered sharp selling in the Pound Sterling, as both the services and manufacturing sectors contracted unexpectedly.
The Composite PMI dropped to 48.2 in April, down from 51.5 in March and well below forecasts of 50.4. This marked the first contraction in overall business activity since October 2023.
The decline was largely driven by a steep fall in the Services PMI, which fell to 48.9 versus expectations of 51.3. Hence, the weak domestic demand and global economic uncertainty weighed heavily on output.
Meanwhile, the Manufacturing PMI also dropped further into contraction, registering 44.0 – in line with expectations but down from 44.9 previously.
BoE Rate Cut Bets Rise Amid Slowing Inflation and Wage Growth
As a result, the weak PMI data added to growing speculation that the BoE may begin easing monetary policy as soon as its May meeting. Market participants are increasingly pricing in a rate cut due to the recent slowdown in inflation and wage growth.
UK pay awards have risen by only 3% for the fourth consecutive quarter, marking the slowest pace since December 2021. Investors are now closely watching UK Retail Sales data for March, set to be released Friday. Therefore, the decline of 0.4% is anticipated, which could further reinforce the case for a rate cut.
US Dollar Volatile Amid Trade Talk Optimism and Fed Uncertainty
Across the Atlantic, the US dollar failed to sustain its bullish rally and lost some of its early gains despite easing tensions in the US-China trade relationship and reassurances from President Donald Trump regarding Federal Reserve leadership.
The US Dollar Index fell back toward 99.00 after touching recent highs, with investors digesting Trump's comments on ongoing trade discussions and his softened stance on Fed Chair Jerome Powell.
Therefore, the US Dollar's pullback, fueled by easing US-China tensions and Trump's comments on the Fed, provided some relief for the GBP/USD pair, helping it recover from early losses and stabilize.
Looking ahead, market participants are eyeing the flash US S&P Global PMI data for April during the North American session, which could influence Fed rate expectations and impact the USD outlook (edited)
GBP/USD – Technical Analysis
GBP/USD has found support around the 1.3291 level following a sharp pullback from its recent highs near 1.3415.
The pair is now attempting to regain footing above the 50-period SMA (1.3318), which could serve as a pivot for bullish continuation. Price action suggests potential for a rebound if buyers maintain control above the 1.3291 trigger level.
A bullish engulfing candle has formed near the rising trendline and 50-SMA support zone, reinforcing a potential reversal. This pattern gains significance with RSI recovering from 45.12 — signaling early bullish momentum without entering overbought territory.
If the pair holds above 1.3291, the upside target sits at 1.3395. A break below 1.3228 would invalidate the setup and expose GBP/USD to deeper correction levels.
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