The GBPUSD exchange rate will see the release of the latest three-month estimate for UK GDP later on Monday.
The figure will likely drive the pair ahead of US inflation data later in the week.
GBPUSD Weekly Chart
GBPUSD has been trending higher and bounced above a trend channel in November for further gains. The 1.23 level is the resistance for retreating to 1.20 or further gains.
Monday's GDP expectations for the UK are for a -0.4% drop in growth compared to the previous decline of -0.2%. The economy is expected to see a more significant year-on-year number into the end of October at 1.4% compared to 1.2%.
Recent data from Pantheon Macroeconomics showed why the UK has been the underperformer among the G7 economies since the onset of the pandemic. Energy prices and slower growth in household spending are driving much of the difference.
Britain's economy has yet to recover to its pre-coronavirus level of GDP. In contrast, all other G7 economies are now more prominent than at the end of the fourth quarter of 2019. Economists have been trying to understand the reason for the underperformance.
Growth in household spending has yet to keep pace with rising prices, meaning it has declined in absolute terms and more than anywhere else. This drags on GDP growth for the UK and adds to prolonged recessionary pressure.
"This is partly because consumer energy prices haven't risen much in the US and have been controlled directly to a greater extent by Eurozone governments," economist Samuel Tombs said.
"But note too that core goods prices have risen more in the UK than in the Eurozone since Brexit, whereas previously they moved in sync." "This suggests British households have paid the price for the greater cost and complexity faced by overseas businesses exporting to Britain," he added.
Higher energy prices have also been met with more limited government intervention than in other nations, which added to the economy's weight.
Tuesday will bring US inflation, and last month's drop to 6.1% from 6.3% was a driver of gains in stocks and weakness in the US dollar. The GBPUSD will take its lead from the UK GDP on Monday and translate that into US inflation.
