GBPUSD Awaits Latest British GDP Growth Data

The GBPUSD exchange rate awaits the latest UK growth data after the US inflation level remains.

GBPUSD-Weekly-Chart-British-GDPGBPUSD – Weekly Chart

The GBPUSD exchange rate has found support at the 1.2680 level and attempted a rally to 1.2800. A stronger GDP number could see the pair rocket above that mark.

The monthly figure for the UK’s growth engine is expected to flatline at 0%. That would lead to a 0.5% year-on-year figure which still beats the previous recession expectations.

The National Institute of Economic and Social Research (Niesr) said in its latest forecast that the UK economy would avoid a recession in 2023. However, a “60% risk” of a recession is still at the end of 2024.

The group predicted that UK GDP would increase by 0.4% in 2023, representing a marginal improvement from its previous May forecast. However, Niesr also downgraded earlier predictions of 0.6% growth next year down to 0.3% after pressure from higher-than-expected borrowing costs. The think tank has predicted it will be another year until the country’s growth recovers to its pre-pandemic levels in early 2020.

Higher interest rates, which are expected to peak at 5.5%, will be the crucial headwind for growth prospects.

Stephen Millard, deputy director for macroeconomic modelling and forecasting at Niesr, said: “The triple supply shocks of Brexit, Covid, and the Russian invasion of Ukraine, together with the monetary tightening that has been necessary to bring inflation down, have badly affected the UK economy”.

“As a result, we expect stuttering growth over the next two years and GDP to only recover to its 2019 Q4 level in 2024 Q3”.

“The need to address the UK’s poor growth performance remains the key challenge facing policymakers as we approach the next election.”

Tomorrow will also see consumer sentiment figures from the US, which is expected to dip from 71.6 to 71.0 as consumers still wear the scars of the inflation surge. Inflation on Thursday climbed 0.2% but is only 1.2% from the Fed’s target rate.

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