Sterling surged overnight against the US dollar to hit $1.67/£1 as GDP figures for the 1st Quarter of 2011 revealed that the UK’s economy expanded by 0.5% - boosted by a surge in activity from the service industry – and markets reacted to Fed Chairman Ben Bernanke’s comments on US monetary policy. Sterling had fallen against both the euro and US dollar ahead of the results as many investors expected the figures to disappoint. Key sectors of the economy, such as manufacturing and services grew at a healthy pace, recording progress of 1.1 and 0.9 percent respectively. Business services and finance expanded by 1.0 percent, the best reading since 2007. Most BoE policymakers want to see a sustainable recovery before tightening monetary policy, meaning interest rates are likely to stay at record lows at least until July despite inflation running at twice the bank's 2 percent target. Call in now for a live exchange rate.

In the euro zone, the euro strengthened against the US dollar after data showed that European industrial orders gained for a fifth consecutive month in February and the US dollar retreated ahead of the Federal Reserve’s interest rate meeting. Greek bond yields have soared this month on speculation that Athens may have to restructure its 327 billion euro (289.6 billion pound) sovereign debt by choosing one or more of several options: extending maturities, lowering interest rates, or cutting the principal. Call in now to ensure that you don’t lose out.

The US dollar plummeted against the euro and after the Federal Reserve’s meeting yesterday evening in which it signalled that it would hold interest rates steady to support the U.S economy after its bond-buying program expires in June. The signals to keep monetary policy loose saw investors dump the US dollar and flock to gold, which hit a fresh record high. The Fed will now probably wait until 2012 to announce sales of mortgage or Treasury securities that it bought to provide stimulus to the economy. Out later today there is GDP data and unemployment figures – GDP is expected to show a drop on last month so there could be some significant volatility.

Elsewhere, the Australian dollar climbed to a record high versus the dollar as consumer prices gained the most since 2006, increasing speculation that the Reserve Bank of Australia will resume its interest rate increases that have been on hold for several months. In addition, the Japanese yen slipped against the euro and the Australian dollar after rating agency Standard and Poor's cut Japan's credit rating outlook to negative from stable, citing the earthquake’s impact on already shaky public finances.

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