Unexpected GDP growth in the second quarter of the UK supported the pound, and GBP/USD rose to around 1.3545, waiting for US retail sales data

In early European trading on Friday, the pound maintained its gains against the dollar at around 1.3545, mainly driven by unexpectedly positive economic data from the UK and pressure on the dollar.

According to the Office for National Statistics, GDP growth in the second quarter of 2025 was 0.3% month-on-month, higher than market expectations of 0.1%, although lower than 0.7% in the first quarter. On a year-on-year basis, GDP growth in the second quarter was 1.2%, also higher than market expectations of 1.0%.

The better-than-expected performance of the British economy directly supported the pound, boosting market confidence in the resilience of the British economy.

Analysts pointed out that while the UK economy has slowed in the context of high interest rates, the data suggest that domestic demand and the service sector remain somewhat supportive.

In terms of the US dollar, although the recent US employment and CPI data have been soft, strengthening the market's expectations for the Federal Reserve to cut interest rates in September, the PPI released on Thursday was significantly higher than expected (3.3% year-on-year, higher than the previous value of 2.4% and expected 2.5%), which slightly reduced the probability of interest rate cuts from 96% to 92%.

Market observers believe that while the PPI data has weakened some interest rate cut bets, the overall trend remains biased towards easing during the year.

The next key figure on the market's radar is Friday night's US retail sales report for July, which is widely expected to grow at a 0.5 per cent monthly rate. If the data is higher than expected, it could boost the dollar and weigh on the pound. If it is lower than expected, it could push GBP/USD further higher.

From a technical perspective, the daily chart shows that GBP/USD has broken through the short-term resistance level of 1.3520 and tested the 1.3550 area. If the price can stand firmly at 1.3550, it is expected to further explore 1.3585 or even 1.3620;

On the contrary, if you fall back below 1.3520, you may fall back to test 1.3480 support. The MACD kinetic energy column gradually increases, and the RSI is above 60, indicating that short-term bulls are dominant.

Editorial opinion:

The current strength of the pound is more dependent on the unexpected positive UK economic data and the expected support of US dollar interest rate cuts, but the risk of a rebound in the dollar still exists. If the US retail sales data is higher than expected, the upside space for GBP/USD may be limited; conversely, weaker than expected data may push the exchange rate to break through the key resistance above 1.3550 and continue the bullish market.