Pound Stands Firm: Can UK Growth Outshine Fed Hawkish Rhetoric?

GBP/USD Holds Its Ground

On June 30, 2025, GBP/USD stayed steady at 1.3707, shrugging off hawkish remarks from Atlanta Fed President Raphael Bostic, who projected just one rate cut in 2025 and three in 2026. The UK’s Q1 GDP grew 0.7% quarter-on-quarter, its fastest pace in a year, yet signs of cooling demand tempered optimism. A new U.S.-UK trade deal, effective Monday, lowered tariffs on UK industrial goods, boosting sentiment. Will the pound maintain its resilience amid mixed signals?

Economic Data in Focus

UK annual GDP hit 1.3%, aligning with forecasts, but softening demand raises concerns. Across the Atlantic, June’s Chicago PMI dipped to 40.4, missing expectations of 43, signaling U.S. economic contraction. Markets expect the Federal Reserve, led by Chair Jerome Powell, to cut rates by 64 basis points by year-end, while Bank of England Governor Andrew Bailey faces pressure for 50 basis points of easing.

Trade Deal Sparks Hope

The U.S.-UK agreement offers relief for British exporters, like a Manchester steel firm benefiting from lower tariffs. However, Bostic’s cautious stance and Fed succession talks under President Trump cloud the dollar’s outlook, capping GBP/USD gains.

What’s Next?

Tuesday’s speeches by Powell and Bailey could sway markets. If UK demand weakens further, GBP/USD may test 1.3600. A break above 1.3752, however, could signal bullish momentum toward 1.3800.