Sterling falls after weak UK GDP growth and industrial output, coupled with dovish BoE remarks, overshadow inflation concerns.
GBP/USD retreated below 1.3500, erasing nearly half a percent as UK economic data underwhelmed. May’s GDP grew just 0.1% month-over-month, barely offsetting April’s contraction, while industrial production dropped 0.5%, missing expectations for a smaller decline.
The Bank of England’s deputy governor added to pressure with dovish remarks, emphasizing growth risks over inflation. This contrasts with the central bank’s official stance, where two members voted for a rate hike in June amid 2.8% CPI inflation, above the 2% target. The mixed signals highlight internal committee divisions, historically a drag on Sterling.
The pullback follows a 400-pip rally from July’s lows near 1.3150, with technical indicators signaling overbought conditions. Across the Atlantic, strong US data further tilted the scales against the Pound.