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The GBP/USD pair has fallen sharply, nearing its year-to-date low of 1.3200, following the release of disappointing UK GDP data. The British economy contracted by 0.3% in Q1 2024, marking the first decline since Q4 2023, driven by weak manufacturing and construction sectors. This has intensified pressure on the pound, with traders anticipating further declines ahead of the US PCE price index release, a key inflation indicator for the Federal Reserve. The GBP/USD weakness reflects broader concerns about the UK's economic resilience amid rising interest rates and a fragile recovery. Traders are closely monitoring the Bank of England's policy stance, with speculation growing about potential rate cuts later in the year. The pair's proximity to critical support levels has heightened volatility, making it a focal point for forex traders seeking short-term opportunities. For markets, the GBP/USD movement could influence cross-currency flows and risk appetite. If the pair breaks below 1.3200, it may trigger stop-loss orders and further depreciation. Investors should also watch the upcoming US PCE data, which could sway the Federal Reserve's rate decisions and indirectly impact the pound. Key levels to monitor include 1.3200 (support) and 1.3400 (resistance).
