GBP/USD Falls as UK Economic Contraction Weighs on Sterling

GBP/USD is trading under sustained selling pressure as the latest data reveals a contraction in the UK economy, intensifying concerns about the health of Britain's growth outlook. The economic downturn adds to the headwinds facing sterling, which was already struggling against a broadly stronger U.S. dollar driven by hawkish Federal Reserve expectations and rising Treasury yields. The GDP contraction raises the prospect that the Bank of England may need to adopt a more dovish stance, potentially accelerating rate cuts to support the faltering economy. This divergence in monetary policy trajectories between the Fed and the BoE is a key bearish factor for GBP/USD. From a fundamental perspective, the combination of weakening UK economic output and resilient U.S. data creates a challenging environment for cable bulls. Traders should monitor upcoming UK economic releases, including labor market and inflation data, for further evidence of deterioration that could deepen the selloff. Technical levels on the downside will be critical to watch, as a break through key support zones could accelerate losses toward multi-month lows.