GDP figures for the UK show that the UK’s economy has shrunk by 0.3% in the first three months of the year

Yesterday was a very busy day in the markets, with many fundamental figures being released; only certain figures however actually moved the markets.

In the UK, revised GDP figures have shown that the economy shrank by 0.3% in the first three months of the year, which is more than previously thought. Last month's initial estimate from the Office for National Statistics (ONS) showed a contraction of 0.2%.

There are concerns that the UK economy will shrink again in the second quarter of the year and the governor of the Bank of the England Mervyn King has warned that the Queen's Diamond Jubilee could reduce output.

A top EU official is launching a plan to rescue the Eurozone by binding its 17 nations closer together. There is a widely held view that the EU single currency needs a fiscal union in order to function more smoothly. The "building blocks" for strengthening economic union will be drafted by the European Council President, Herman Van Rompuy, with input from the European Commission and European Central Bank.

Manufacturing and Service PMI contracted in the whole of the Eurozone, however more concerning in the powerhouse Germany. German business confidence also fell as the crisis escalates. Wall street banks feel that the ECB will introduce another round to LTRO as early as July and a possible interest rate cut is also likely.  

US jobless claims fell marginally by 2000 since last week and Federal Reserve turned the tables on QE suggesting no more is required unless the European crisis takes a turn for the worst.

As we move into the weekend, as is usual in the FX markets, the week will finish  either on a high or low, with investors selling their positions before the weekend. What will be interesting to see is if the pound can hold its ground against its major counterparts, especially after the weak GDP figures yesterday. The troubled Euro could however play its part in where we finish today.

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