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  • Economic output in the UK was unchanged in February.
  • Britain will likely avoid the first-quarter recession that the BOE foresaw last month.
  • The dollar stayed weak in Asian trade on Thursday.

Today’s GBP/USD outlook is bullish. The dollar stayed weak in Asian trade on Thursday, supporting the pound. Lower-than-expected US inflation statistics fueled the view that the Federal Reserve will conclude its monetary tightening next month with one final interest rate hike.

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After increasing by 0.4% in February, the Consumer Price Index increased by 0.1% last month as higher rental prices offset a drop in gasoline prices. According to a Reuters poll of economists, the CPI was expected to rise 0.2% in March.

British economic growth slowed in February due to public sector worker strikes. Still, according to official figures, a stronger-than-anticipated rebound in January means a recession is less likely to be brewing in early 2023.

In February, economic output was unchanged month over month compared to the consensus estimate of a 0.1% increase in an economist poll conducted by Reuters.

Britain will likely avoid the first-quarter recession that the Bank of England foresaw last month. The Office for National Statistics raised its estimate for January’s growth from 0.3% to 0.4%.

However, the overall picture is still weak. While Britain’s economy avoided a recession but stagnated during the past year.

According to estimates of the International Monetary Fund released this week, Britain would rank last among the world’s major countries in expected economic growth in 2023, with a 0.3% contraction projected.

GBP/USD key events today

Key economic releases will come from the US, including the producer price index, a leading indicator of consumer inflation. There will also be the initial jobless claims report that will show the current state of unemployment.

GBP/USD technical outlook: Weak break above the 1.2500

GBP/USD technical outlook
GBP/USD technical outlook chart

The 4-hour chart shows GBP/USD above the key 1.2500 psychological level. This is the second time the price has faced this level. The first time, the price bounced lower and punctured the 30-SMA resistance. The bulls managed to get back control at the 1.2345 support level.

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The second attempt was successful. However, bulls look weaker. The RSI has made a lower high, indicating weakness above the 1.2500 key level. Bulls can only keep making higher highs and lows if the price exceeds 1.2500. Otherwise, we might see the price reverse lower.

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