Breaking UK News: UK Growth Revised Higher, GBP/USD Nears A Multi-Week High

The UK economy expanded by 0.1% in Q4 2022, and data released by the Office for National Statistics (ONS) showed delayed, one-tenth of a percentage above expectations. The Q3 data was also revised higher by the same amount to -0.1%.

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According to the ONS,

‘The level of quarterly GDP in Quarter 4 2022 is now 0.6% below its pre-coronavirus (COVID-19) level (Quarter 4 2019), revised up from the previous estimate of 0.8% below. GDP is now estimated to have increased by 4.1% in 2022, revised up from the previous estimate of 4.0%. Compared with the same quarter a year ago, real GDP increased by 0.6%.’

UK GDP Quarterly National Accounts – October to December 2022

Cable (GBP/USD) pushed marginally higher on the ONS release and back above 1.2400 for the first time in a month. Sterling has been slightly better bid over the last few weeks against the US dollar. The greenback remains under pressure from ongoing market expectations that the Fed may finally have finished their aggressive rate hiking cycle with expectations also building that the US central bank may start cutting rates at the end of Q3/start of Q4. This afternoon (13:30 UK) we get the latest look at US price pressures with the release of the closely monitored US core PCE data. If inflation is the US remains stubbornly high and sticky, these rate-cut expectations will disappear, boosting the value of the US dollar.

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Looking at the daily GBP/USD chart, while the pair may start to look expensive, using the CCI indicator, the rest of the set-up remains positive. Cable trades above all three moving averages, which are now in a positive order, while recent resistance turned support around the 1.2292 level continues to hold. The recent double top around 1.2448 is looking vulnerable to any move higher and a confirmed break above this level would leave 1.2667 as the next point of resistance.

GBP/USD Daily Price Chart – March 31, 2023

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Chart via TradingView

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