UK economy contracts by 0.3%

The UK’s GDP has been revised downwards to 0.3% for the first quarter on this year. UK economy contracts by 0.3%This was 0.1% lower than last month’s figures from the Office for National Statistics and continues the wave of contraction and growth between quarters.

Sterling dropped temporarily against the Greenback but has since shrugged of the news trading above pre-GDP announcement levels at 1.5668 and 1.2480 against the single European currency.

As for the rest of the day we will as usual be focusing on political stories in Europe however traders will have one eye on the Durable Goods Orders from the states where a 0.2% figure is expected latter this afternoon.

Figures over night suggested Chinese manufacturing declined during the month of April indicating the economy is continuing to slow.

The PMI data fell from 49.3 to 48.7 month on month and comes at a time when markets are in turmoil over the Eurozone and there are concerns of how this may hit demand for Chinese exports.

The news is not a great shock to the markets however the rate appears to be faster and bigger than previously thought and consequently places more pressure on the Chinese government to boost domestic growth.

Back to Europe and European Council President Herman Van Rompuy has stated that leaders want Greece to stay in the eurozone however they must “respect its commitments”.

He went on to say, “We are fully aware of the significant efforts already made by the Greek citizens. The eurozone has shown considerable solidarity having already disbursed, together with the IMF (International Monetary Fund) nearly 150bn euros in support of Greece since 2010.”

However the market is becoming increasingly sceptical of Greece remaining in the eurozone.

Most notably today in a Citigroup eurozone forecast: that Greece will leave the Euro in early 2013, Portugal and Ireland to gain second aid packages as well as Spain and for the ECB to cut rates to 0.5% following a Greek exit.

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