Sentiment towards GBP improved yesterday thanks to a better-than-anticipated upward revision to the UK’s first quarter growth figures. The quarterly score was upgraded from 0.3% to 0.4% and this drove the annualised figure up from 2.5% to 2.9%. It was also reported that the British economy expanded by 3.0% in 2014, which was the fastest rate of growth since 2006.

Although the Q1 figures still point to growth around half as fast as in the second half of 2014, analysts are optimistic that the economy will pick up the pace as we progress through the year. Indeed, net trade knocked off around -0.6% of GDP in the first three months of the year but the current account deficit tightened by over £2 billion at the start of Q2 and this could contribute to a more impressive GDP figure.

The Pound exchange rate could receive another boost if this morning’s UK manufacturing PMI result prints inline with economists’ expectations at 52.5, up from 52.0 previously.

Euro

The first recorded sovereign default took place in the 4th Century BC when ten Greek cities failed to repay loans from the temple of Delos. The latest took place last night when Greece didn’t honour a €1.6 billion loan from the IMF. This act, though not universally recognised as a technical default, means that Greece has become the first developed nation in history not to repay the IMF and puts the Hellenic nation on a list of countries in arrears that includes Zimbabwe, Sudan and Somalia.

The Euro declined by around a cent yesterday in reaction to the news.

The debt default hardly came as a surprise but Athens did manage to shock markets yesterday with a new proposal. The Greek government attempted to convince voters that, contrary to what the majority of European leaders have been saying, a NO vote in this Sunday’s referendum on austerity would not necessarily equate to a vote to leave the Eurozone by proposing a brand new bailout to its creditors. PM Alexis Tsipras suggested that the proposed new programme, which has nothing to do with the negotiations of the past five months, was ‘a viable solution to stay in the Euro’ regardless of the outcome of Sunday’s high-stakes vote.

US Dollar

It was an interesting day of US ecostats yesterday. The Pound initially rallied through technical resistance as investors sold the ‘Greenback’ in response to a surprise contraction in the Chicago manufacturing PMI. The factory output index printed below expectations of 50.0 at 49.4.

However, Sterling was forced to retreat just 15 minutes later when a bumper US consumer confidence score bolstered the appeal of the US Dollar. The Conference Board reported that consumer sentiment increased from 95.4 to 101.4 in June as robust labour market gains and soft consumer prices helped to boost the purchasing power of citizens in the world’s largest economy.

The US manufacturing index is tipped to come in at 53.1 this afternoon, which would represent a slightly better figure than the expected 52.5 in Britain. If the reports print inline with expectations we could see GBP/USD start to slide.

Canadian Dollar

Investors who softened their exposure to the Canadian Dollar ahead of yesterday’s Canadian GDP report were vindicated when data showed that the North American economy shrunk for a fourth month on the trot in April. Compared to forecasts of +0.1% growth, Canada registered a -0.1% contraction, which took the annualised figure down from 1.5% to 1.2%. The Pound to Canadian Dollar exchange rate rallied by around 150 pips to strike a fresh six-year high in response to the downbeat GDP report.

Australian Dollar

The Australian Dollar continued to rebound from 71-month lows against the Pound yesterday, despite UK GDP printing higher-than-anticipated. However, the outlook for the ‘Aussie’ looks bleak and we could easily see the risk-sensitive currency resume its decline against Sterling if Greece cannot forge a deal to remain inside the Eurozone.