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Bestie. BFF. Bosom buddy. Confidante. Gwen is Annie John's pal. From the first day they meet, Annie says they "were in love, and so we walked home arm in arm together" (2.24).
When Annie's mother declares that she is becoming a young woman and their relationship suffers, Gwen sweeps in and takes her mother's place as the main object of Annie's affection. Or rather, Annie transfers all her love from her mother to Gwen:
I told her that when I was younger I had been afraid of my mother's dying, but that since I had met Gwen this didn't matter so much. (3.22)
Gwen and Annie's relationship is part maternal—when Annie learns that Gwen is one of ten children, she vows to love her and only her since she couldn't possibly receive enough love from her mother—and part romantic. There are hints of lesbianism, but Gwen and Annie's relationship can also be read as two girls trying on romantic affection in a platonic manner. Certainly, the way that Annie talks about Gwen sounds like something out of a cheesy romance novel:
For me, each day began as I waited for Gwen to come by and fetch me for school. My heart beat fast as I stood in the front yard of our house waiting to see Gwen as she rounded the bend in our street. The sun, already way up in the sky so early in the morning, shone on her, and the whole street became suddenly empty so that Gwen and everything about her were perfect, as if she were in a picture. (3.17)
Picture perfect, eh? But it's notable that, after a while, Annie starts finding Gwen to be as dull as ditch-water. What was once charming becomes annoying and Annie thinks, ultimately, that Gwen is just a shallow parody of a giggling schoolgirl.
Whether that's proof of their relationship being nothing more than BFF-itude, or proof that Gwen + Annie = luv, we'll leave up to you. There are plenty of compelling arguments either way to serve as dynamite essay fodder.