The UK economy showed renewed momentum in November, with Gross Domestic Product expanding by 0.3% month-on-month after contracting by 0.1% in October, according to figures released by the Office for National Statistics on Thursday. The outcome exceeded market expectations, which had pointed to a modest 0.1% increase.
Additional details from the report painted a broadly positive picture. The services sector, the backbone of the UK economy, grew by 0.2% on a three-month-on-three-month basis in November, improving from October’s revised reading of 0.1%. Industrial activity also surprised to the upside, with Industrial Production climbing 1.1% on the month, while Manufacturing Output surged by a stronger-than-expected 2.1%.
Despite the upbeat data, the immediate market reaction was muted. At the time of writing, GBP/USD was trading slightly higher on the day, up around 0.03% near the 1.3436 level, as broader Dollar dynamics continued to dominate price action.
Earlier in the session, markets had been bracing for a more modest recovery. Economists had forecast GDP growth of just 0.1% in November, following October’s contraction. Industrial Production was also expected to rise marginally by 0.1%, after a sharp 1.1% gain in the prior month, while annual output was projected to remain in negative territory.
From a currency perspective, stronger UK growth data can help stabilize the Pound by influencing expectations around Bank of England policy. Figures that meet or exceed forecasts tend to ease concerns about near-term rate cuts, while weaker readings would intensify pressure on Sterling. Manufacturing Production remains a closely watched indicator, given its sensitivity to both domestic demand and global trade conditions.
However, GBP/USD continues to face headwinds from the US Dollar. The Greenback has been supported by firmer-than-expected US Producer Price Index and Retail Sales figures, along with last week’s drop in the unemployment rate, reinforcing expectations that the Federal Reserve may keep interest rates unchanged for longer. Traders are also keeping an eye on US Initial Jobless Claims later in the day for further direction.
On the technical front, GBP/USD trades around 1.3420, struggling to regain upside traction. The 14-day Relative Strength Index has cooled to the neutral 50 level after slipping from overbought territory, signalling balanced momentum. Immediate resistance is located near the nine-day EMA at 1.3444, and a daily close above this level could revive bullish interest toward the three-month high at 1.3562. On the downside, key support rests at the 50-day EMA around 1.3387. A sustained move below this level would expose deeper losses, potentially opening the door toward the 1.3010 area, which marks the eight-month low.
