The pound remains on the ?front-foot?

The pound closed last week buoyed by the latest data release from the Office for National Statistics (ONS) which reported that UK gross domestic product (GDP) for the second quarter of this year has been revised upwards to 0.7%, up 0.1% from the initial estimate released in July and 1.4% higher than this time last year.

The ONS said the revision reflected growth across the agriculture, construction, production and services sectors with the services industry providing the biggest boost with an increase of 0.6% during the period.

Output in the construction industry was estimated to have risen by 0.9% quarter-on-quarter.

Vicky Redwood, Chief UK Economist at Capital Economics said “The slight upward revision to second quarter GDP continues the run of good news on the UK economy and the spending breakdown looks reasonably encouraging too. As indicated by the timelier retail sales figures, consumer spending played a big role, rising by 0.4% quarter-on-quarter. But there was some evidence of a rebalancing towards other sectors too. Investment posted a 1.7% quarterly rise, while net trade added 0.3% points to quarterly growth. So the recovery seems to be becoming more balanced – which is just as well, given that the consumer-driven growth seen previously was largely based on households running down their saving.”

However, she was quick to point out that the UK economy still faces some “serious constraints” such as the fiscal squeeze and weak bank lending, a fact underlined by Bank of England Deputy Governor Charlie Bean who said that "We've said that we'd be willing to start repurchasing [government bonds or the quantitative easing (QE) asset purchase programme as it is often referred to] again if economic conditions dictated so. So, if we saw a slowdown in the euro zone or something like that, we might feel that we need to restart purchases , but at the moment we are not," in an interview with CNBC.

With the London markets closed yesterday for the August Bank Holiday, dealing volumes were down making for subdued market conditions.

The US dollar gained on the back of a deeper than expected fall in US durable goods orders with big-ticket US goods tumbling a bigger than expected 7.3% in July, the steepest decline in more than a year.

At the weekend, Fed officials wound up their annual meeting in Jackson Hole with some analysts still suggesting that the Fed will start to taper or trim its stimulus efforts next month.

The euro was boosted by German second quarter economic growth which points to a solid recovery driven by corporate fixed investment and strong consumption with the German statistics office confirming that the German economy expanded by 0.7% in the second quarter of this year.

Meanwhile, European Central Bank (ECB) governing council member Ewald Nowotny indicated that the recent positive news on the euro zone economy has taken away the need for the euro area's monetary authority to implement further rate cuts citing a “stream of good news”.