GBP/USD gains ground near 1.3400 ahead of UK Q3 GDP data

• GBP/USD rises as Pound Sterling gains ground ahead of the UK’s third-quarter GDP release.
• Markets have fully priced in a first Bank of England rate cut in June 2026.
• CME FedWatch shows a 79.0% chance of a January hold, while 25-basis-point cut odds fell to 21.0%.

GBP/USD gains ground after three days of losses, trading around 1.3390 during the Asian hours on Monday. The pair depreciates as the Pound Sterling (GBP) holds ground ahead of the release of the United Kingdom (UK) Gross Domestic Product (GDP) for the third quarter.

The British Pound may face headwinds as markets have fully priced in a first interest rate cut by the Bank of England (BoE) in June 2026, while the probability of a March cut stands at a relatively high 40%, according to Capital Edge rate probability data.

The US Dollar (USD) could gain ground as Federal Reserve (Fed) Chair Jerome Powell signaled that a rate hike is not likely in the near future and that the US central bank is in a "wait-and-see" mode to assess incoming economic data.

The Summary of Economic Projections, or so-called "dot plot," indicated a median expectation of only one additional rate cut in 2026. The CME FedWatch tool shows a 79.0% probability of rates being held at the Fed’s January meeting, up from 75.6% a week earlier. Meanwhile, the likelihood of a 25-basis-point rate cut has fallen to 21.0% from 24.4% a week ago.

Traders are also focusing on US President Donald Trump, who said last week that the next Chair of the Federal Reserve (Fed) will be someone who believes in significantly lower interest rates. Meanwhile, Fed Governor Christopher Waller, who is under consideration for the role, reiterated his dovish stance on interest rates during a CNBC forum.