GBP/USD surges amid lower-than-expected US GDP growth, BoE hold

• BoE Governor Bailey says that it is reasonable to leave interest rates unchanged at 3.75%.
• US Initial Jobless Claims fell to 189K from the previous 215K, the lowest level in almost six decades.
• GDP came in at a 2% annualized rate, lower than the 2.3% expected.

The GBP/USD pair surges 0.6% on Thursday, trading at around 1.3550 level, after the Bank of England (BoE) left interest rates unchanged at 3.75% with an 8-1 vote and amid lower-than-expected GDP growth in the US.

While the BoE's decision was highly expected by markets, Governor Andrew Bailey's remarks were seen as broadly hawkish. Bailey said that it is "reasonable" to hold rates at 3.75% given the United Kingdom (UK) economic situation and the uncertainty revolving around the Middle East, and also added that "it would be a mistake to wait before second-round effects before acting".

Moving over to the United States (US), the US Department of Labor (DoL) reported that the number of US citizens filing new applications for unemployment insurance fell to 189K for the week ending April 25, the lowest level in almost six decades. The reading was expected to remain steady at 215K, the previous week's revised level, which was revised up from 214K.

Apart from that, the release of the Personal Consumption Expenditures (PCE) Price Index, the Federal Reserve’s (Fed) favorite inflation gauge, showed that inflation climbed to 3.5% YoY in March from 2.8% in February, the US Bureau of Economic Analysis reported on Thursday. This print was in line with market expectations. On a monthly basis, the PCE Price Index rose 0.7%.

Even though Initial Jobless Claims were better-than-expected and PCE inflation came in line with forecasts, these were not enough to outweigh the preliminary Q1 Gross Domestic Product (GDP), which showed that the US economy grew at a 2% annualized rate, lower than the 2.3% expected.

Short-term technical analysis:

On the four-hour chart, GBP/USD trades at 1.3556. The pair holds a constructive near-term bullish bias as it trades above both the 20-period Simple Moving Average (SMA) at 1.3513 and the 100-period SMA at 1.3501, suggesting the recent advance is underpinned by layered dynamic support. The Relative Strength Index stands around 61, pointing to firm but not yet overstretched upside momentum while price edges just beneath the horizontal resistance at 1.3561, keeping the immediate topside capped for now.

On the downside, initial support is seen at the nearby horizontal level around 1.3535, followed by 1.3517, which aligns with a prior floor and sits close to the 20-period SMA at 1.3513. A deeper pullback would expose the 100-period SMA at 1.3501 and the horizontal level at 1.3499 as a broader demand area. On the topside, a clear break above 1.3561 would reopen the path for further gains, in line with the supportive moving average structure and positive momentum backdrop.

(The technical analysis of this story was written with the help of an AI tool.)