British pound stabilizes after sharp fall

The British pound has posted considerable gains in the Thursday session. GBP/USD is currently trading at 1.3476, up 0.36% on the day.

UK GDP revised upwards

There was positive news about the UK economy, as the final estimate for UK growth in Q3 was 5.5%, revised upwards from 4.8%. GDP is now about 3.3% below its pre-Covid level at the end of 2019, but the economy is clearly heading in the right direction.

The UK was hit by a petrol shortage across the country this week, due to a severe shortage in truck drivers. The lack of drivers has been exacerbated by the Covid pandemic and Brexit, which has caused many foreign workers to leave the UK and return to the European Union. The British Chamber of Commerce is warning that the fuel shortage could severely damage the economy, and the pound took a tumble earlier in the week, falling to its lowest level since mid-June.

After running roughshod over the majors for most of the week, the US dollar has taken a pause from its upswing on Thursday. The pound was hit hard, falling almost 2 percent during a mid-week slide. The dollar’s newfound strength can be attributed to the market’s concerns over inflation, which has been moving higher for months. What is new in the equation is that the Fed appears to have accepted that inflation isn’t going away anytime soon.

Perhaps the most important instance of the Fed’s take on inflation was evident from Fed Chair Jerome Powell’s congressional testimony on Tuesday. Powell grudgingly acknowledged that higher inflation may not be all that transient, saying that inflation “will likely remain so in coming months before moderating”.

Powell’s remarks were followed by more hawkish comments from Fed President Bullard, who said that the Fed might need two rate hikes in 2022 in order to combat inflation, and other members have urged the Fed to start tapering shortly. With a Fed taper practically a done deal, attention will shift to the timing of a rate hike, and further talk of a move in 2022 will be bullish for the US dollar.


GBP/USD Technical Analysis

With GBP/USD falling sharply on Wednesday, we start at lower levels:

  • There are resistance lines at 1.3535 and 1.3603
  • 1.3459 is a weak support line. Below, there is support at 1.3229


Content is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Business Information & Services, Inc. or any of its affiliates, subsidiaries, officers or directors. If you would like to reproduce or redistribute any of the content found on MarketPulse, an award winning forex, commodities and global indices analysis and news site service produced by OANDA Business Information & Services, Inc., please access the RSS feed or contact us at Visit to find out more about the beat of the global markets. © 2023 OANDA Business Information & Services Inc.

Kenny Fisher

Kenny Fisher

Market Analyst at OANDA
A highly experienced financial market analyst with a focus on fundamental and macroeconomic analysis, Kenny Fisher’s daily commentary covers a broad range of markets including forex, equities and commodities. His work has been published in major online financial publications including, Seeking Alpha and FXStreet. Kenny has been a MarketPulse contributor since 2012.
Kenny Fisher

Latest posts by Kenny Fisher (see all)