The British economy expanded by 1.0 per cent last December, which surpassed the initial market expectations for a more moderate growth of 0.5 per cent.
Nevertheless, this is the slowest growth rate since the recovery process began in the second part of last year, according to the Office for National Statistics.
Boris Johnson's government was forced to impose even more stringent containment measures in the latter part of 2020 because of rising COVID-19 cases. The fallout from these restrictions is stifling growth as economic activity remains muted.
Even still, the better-than-expected GDP performance resonates with BOE's recent decision to refrain from scaling up its asset purchase facility. Britain's economy continues to exhibit resilience against the pandemic's adverse consequences, and the recovery is not as fragile as previously anticipated.
Meanwhile, the strongly performing pound recoiled following the release of the news. The GBPUSD pair appears to have reached a new swing high recently, which allowed for the beginning of a new correction.
As can be seen on the 2H chart below, the underlying buying volume has been steadily falling since the beginning of the last upswing, whereas bearish momentum has been on the rise since the price of the cable reached the aforementioned swing high. The MACD indicator demonstrates this.
The newly emerging correction appears ready to test the major resistance-turned-support level at 1.37500, which looks poised to be the next make-it-or-break-it point for the market.
This is substantiated by the fact that the level served as a prominent resistance before, and the price action failed to break out above it on three separate occasions. That is why the bulls would be looking for signs of consolidation above it.
Moreover, the 100-day MA (in blue) is currently converging towards the support, which would increase its strength even more.
If the price does break down below the two, this will represent a very solid indication of robust selling pressure.