The British Pound trims earlier gains against the US Dollar on Tuesday as investors digest a mixed set of US economic releases. GBP/USD trades around 1.3478 at the time of writing, easing modestly after touching its highest level since October 1 near 1.3518.
Strong US GDP supports dollar
Sterling softened slightly as the US Dollar found support following stronger-than-expected US Gross Domestic Product data. The US Bureau of Economic Analysis reported that the economy expanded at an annualized pace of 4.3% in the third quarter, well above the 3.3% market forecast and accelerating from the prior 3.8% estimate.
Inflation components remain firm
Inflation indicators within the GDP report also surprised to the upside. The GDP Price Index rose 3.7% in Q3, exceeding the 2.7% forecast and up from 2.1% in Q2. Core Personal Consumption Expenditures increased 2.9%, in line with expectations but higher than the previous quarter’s 2.6%, while headline PCE Prices climbed 2.8%, matching forecasts and accelerating from 2.1%.
Mixed signals from activity data
Other US indicators painted a more mixed picture. Durable Goods Orders declined 2.2% in October, deeper than the expected 1.5% drop, following a 0.7% rise in September. Orders excluding defense fell 1.5%, reversing a 0.1% increase previously, while orders excluding transportation edged up 0.2%, undershooting forecasts and slowing from September’s pace. Industrial Production fell 0.1% month-on-month in October before rebounding by 0.2% in November, beating expectations.
Consumer confidence slips
US Conference Board Consumer Confidence weakened in December, with the index falling to 89.1, below the 91.0 consensus estimate. Although the reading was above the initially reported November figure of 88.7, that data was later revised higher to 92.9, highlighting softer momentum in household sentiment.
Broader USD outlook remains fragile
Despite the modest rebound in the US Dollar following the GDP release, the broader outlook for the greenback remains tilted to the downside. Markets continue to price in further monetary policy easing by the Federal Reserve into 2026, which could limit sustained USD upside and keep GBP/USD supported on dips.
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