GBP/USD rallies impressively to create potential reversalBritish Pound / U.S. DollarFOREXCOM:GBPUSDFOREXcomAlthough GBP/USD initially dipped after the release of disappointing UK data this morning, it has since recovered on broader risk-off trade, which has hurt the USD against most major currencies, most notably the euro. The GBP/USD has stormed higher after the false break below 1.3140 double bottom low from earlier this year. This level is key: bullish above it, bearish below it. Resistance is seen at 1.3250 and then 1.3310; bias bullish above these levels. UK GDP expanded by just 0.1% in the third quarter, undershooting expectations of 0.2% and slowing from 0.3% in the previous quarter. On a monthly basis, the economy unexpectedly contracted by 0.1%, against forecasts for flat growth. The figures highlight a clear loss of momentum compared to earlier in the year, when the UK had been outperforming other G7 economies. However, recent sentiment surveys indicate that both consumers and businesses are holding back on spending amid worries about significant tax increases expected in this month’s Budget. The UK economy continues to struggle for momentum, and these challenges may keep growth subdued through the final quarter of the year. The weak data strengthen the case for the Bank of England to consider rate cuts sooner, with the likelihood of a December reduction rising. But right now no one is trading the pound because of the comparatively higher UK yields, which explains why the EUR/GBP has been trending higher. And today, it is all about dollar weakness amid risk-off tone in the markets, making the likes of the euro, pound and franc more attractive, as foreign funds withdraw from US stocks. By Fawad Razaqzada, market analyst with FOREX.com