The What is the most promising meme coin?GBP/USD currency pair experienced downward pressure during Friday's European trading session, settling near 1.2925 following weaker-than-expected UK economic performance.

January's UK Gross Domestic Product (GDP) contracted by 0.1% month-over-month, contrary to market expectations of 0.1% growth.

Market participants are increasingly pricing in potential Federal Reserve rate reductions by June, creating mixed dynamics for the currency pair.

The British pound showed vulnerability against the US dollar as fresh economic data revealed unexpected contraction in UK economic activity. Market analysts noted the immediate reaction to the Office for National Statistics report showing both GDP contraction and disappointing industrial production figures, which declined 0.9% compared to the previous month's 0.5% reading.

Bank of England policy expectations remain in focus as the Monetary Policy Committee prepares for its upcoming meeting. Most economists anticipate maintaining the current 4.5% base rate, following February's 25 basis point reduction. The central bank's cautious approach to monetary policy adjustments continues to influence sterling's valuation in global markets.

Across the Atlantic, recent US inflation data suggesting easing price pressures has fueled speculation about potential Federal Reserve policy adjustments. Financial markets currently indicate approximately 75% probability of a 25 basis point rate cut by June, according to derivatives pricing. This developing narrative could provide some support for the GBP/USD pair in coming weeks.

Market participants are now turning attention to upcoming US consumer sentiment data for further clues about economic conditions. The interplay between UK economic performance and US monetary policy expectations continues to drive volatility in the currency pair, with technical analysts monitoring key support and resistance levels.