The upward revision to January's growth to 0.4% from 0.3% means Britain is likely to avoid the first-quarter contraction that the Bank of England predicted last month, but data due next week is seen as more important for monetary policy.
"Data next week on inflation and retail sales, but especially jobs data for February, will be crucial because the PMI for the month suggested maybe demand has picked back up again," said Harvey.
The BoE has raised interest rates 11 times in a row in its battle to bring down inflation, which rose to 10.4% in February. Markets are pricing in a 64% chance of a further 25 basis point hike in May, and a lesser chance of no change .
"We don't think they're going to hike again," said Harvey, "but there is a non-negligible risk that they would if the data comes in quite strong."
A murky economic backdrop also remains in focus. A BoE survey on Thursday showed British lenders expect to rein in the supply of mortgage loans in the coming quarter, but increase the supply of consumer credit and corporate loans.
Meanwhile, a survey showed Britain's housing market continued to feel the pinch of higher borrowing costs in March, but property surveyors expect some improvement over the year ahead as they think interest rates are now near their peak. <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ Graphic: World FX rates in 2023 Graphic: Trade-weighted sterling since Brexit vote ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^> (Reporting by Lucy Raitano; Editing by Kim Coghill)
