GBP/USD Holds Above 1.31 as UK Data Reduces BoE Cut Expectations

GBP/USD maintains strength above 1.3100, supported by robust UK economic data that has significantly dampened Bank of England rate cut expectations for 2024. UK inflation surprised to the upside at 2.2% year-over-year, exceeding the 2.1% forecast, while employment data showed unemployment holding steady at 4.2% with wage growth remaining elevated at 5.7%. These figures have prompted markets to reprice BoE easing, with traders now expecting only one 25 basis point cut this year compared to two previously anticipated. The pound has gained 0.6% against the dollar this week, finding technical support at 1.3080 and facing resistance near 1.3180. Sterling's outperformance reflects the diverging monetary policy outlook between the UK and other major economies. Further upside potential exists if upcoming UK retail sales data continues the positive trend, potentially pushing GBP/USD toward the 1.3200 psychological level.