Fundamental Background
UK GDP grew by 0.6% in the first quarter of 2026, notably above the revised 0.2% reading recorded in the fourth quarter of 2025. The main contribution came from the services sector, which expanded by 0.8%. Nevertheless, strong macroeconomic data failed to support sterling: CPI inflation accelerated to 3.3% year-on-year in March, up from 3.0% in February, mainly due to higher motor fuel prices linked to the Middle East conflict.
At its meeting on 30 April, the Bank of England kept the base rate unchanged at 3.75% in an 8–1 vote, while several MPC members signalled the possibility of further tightening should inflationary pressure persist. According to the International Monetary Fund, UK GDP growth in 2026 is expected to reach only 0.8%, representing the largest downgrade among G7 economies.
Technical Picture
From 6 April to 1 May, GBP/USD developed an upward trend supported by a rising trendline. As the pair approached the peak, price action became increasingly compressed, forming a reversal structure with a dense profile concentration in the 1.3480–1.3580 range amid growing selling pressure. After breaking below the trendline and moving outside the profile range, the pair accelerated lower.
GBP/USD is now trading below the horizontal volume zone, signalling continued seller dominance. The lower boundary of the profile, followed by the POC area at 1.3515–1.3520, serves as the nearest reference zone for buyers. If the pair regains the upper boundary of the profile at 1.3580, the next resistance level stands at 1.3650 near the trend highs.
Support around 1.3380 corresponds to the price extremes that preceded the April rally and acts as an important structural support area, which the pair has nearly reached. This limits the room for further downside within the current move.
The RSI + MAs indicator shows readings of 26, 38 and 43. The moving averages remain pointed lower, reflecting ongoing pressure. However, the RSI has already entered oversold territory, which should be taken into account.
Key Takeaways
Strong first-quarter GDP data has not eased concerns over inflation and monetary policy uncertainty, and this fundamental conflict is likely to determine the pair’s future direction. From a technical perspective, the main RSI + MAs reading has entered oversold territory, although there are still no clear signs of a reversal.
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