The British sterling edged higher against its major counterparts in early deals on Thursday after a government report officially confirmed that the U.K. economy avoided recession in the first quarter as initially estimated.
Second estimates from the Office for National Statistics showed that the U.K. gross domestic product grew 0.3 percent sequentially in the first quarter, offsetting the last quarter's 0.3 percent fall. On a yearly basis, GDP advanced 0.6 percent in the first quarter.
Household final consumption expenditure increased for the sixth consecutive quarter by 0.1 percent, while investment continued to impact negatively on expenditure growth, falling by 0.8 percent, the third fall in a row.
Equities were weak in Asia and Europe after the Federal Reserve chief Ben Bernanke hinted yesterday at reducing the current pace of bond purchases if the labor market continued improving.
Negative data from China also pressured the risk-associated assets in the Asian session, with the manufacturing activity in the world's second largest economy shrinking in May for the first time in seven months.
Preliminary results of a survey by Markit Economics showed that the headline purchasing managers' index, an indicator of the health of the factory sector, fell to 49.6 from 50.4 in April.
Eurozone's private sector activity continued to decline in May, but at a slower pace than in the previous month, flash results of a survey by Markit Economics showed today.
The composite output index, that measures performance of the both manufacturing and service sectors, rose to 47.7 in May from 46.9 in April. Economists expected the reading to rise to 47.2.
Germany's private sector activity improved from a five-month low, but remained marginally below the neutral level, flash survey results from Markit Economics showed today. The composite output index rose to 49.9 in May from a five-month low of 49.2 in April. A reading below 50 suggests contraction.
Elsewhere, the Bank of Japan stepped in to curb excess volatility in long-term bond yields by injecting JPY 2 trillion funds into the system, reports said.
Traders await U.S. data on weekly jobless claims and new home sales later in the day, although upbeat data may be viewed negatively in light of the comments from the Fed.
The pound rose to 0.8538 against the euro around 7:20 am ET, briefly recovering from a low of 0.8562 hit earlier in the session. If the pound extends advance, 0.8510 is seen as the next likely upside target level.
The pound advanced to 1.5093 against the US dollar around 7:00 am ET, bouncing off Asian session's fresh multi-month low of 1.5013. Extension of further bull run could help the pair challenging the 1.5150 area.
The sterling staged a rebound against the yen to as high as 153.50 around 7:10 am ET from a low of 151.77 hit earlier in the session. Next bearish barrier for the pound-yen pair is seen around the 154.0 level.
The British currency climbed above the 1.46 against the Swiss franc around 7:05 am ET from a 3-week low of 1.4503 hit earlier in the Asian session. If the pair continues to trade higher, it may find resistance around the 1.4750 area.
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