The forex trading headlines for the European morning session

All eyes this morning were firmly fixed on the UK Q1 GDP first reading and it didn’t disappoint. With traders little prepared for a good number the q/q +0.3 vs +0.1% exp signalled a sharp rally in the pound with GBPUSD moving from 1.5290 to 1.5390 in seconds after earlier coming under renewed pressure from 1.5325. EURGBP had been bought by a UK clearer up to 0.8530 ahead of the data but we were soon lower at 0.8453.

Cable then had a battle going through strong resistance at 1.5425 but failed to retrace too far below 1.5400 and so launched another attack through to 1.5454 taking out a reported barrier option at 1.5450 in the process.

The euro got a lift from comments by Chancellor Merkel that Germany needed higher interest rates given its own growth and inflation data. EURUSD jumped up from 1.3045 to 1.3076 dragging with it EURJPY to 129.90 and EURGBP to 0.8470 before retracing.

USDJPY has looked mostly heavy with two attempts to get through 99.00 but so far no follow-through while USDCHF has fallen back from highs of 0.9480 as USD-bearish sentiment prevails.

AUD has consolidated Asian gains without really looking to threaten higher with AUDGBP selling providing a solid cap. Similar story with NZD and CAD.

The weekly US claimant count awaits at 12.30 GMT but the big question now is whether the proud pound can hold its gains and force its way higher still. Either way the jury on the UK will remain out for a while yet.