Market buzz: Pound plunges on GDP slowdown, Koreas shake

1700:Close Stocks finished the session and the week sharply higher, boosted by equally large falls in the value of Sterling.

But it wasn't weakness in the pound alone that helped to prop up stocks.

On that note, strategists at BoA-Merrill Lynch said: "China is easing (the 1st catalyst for US$ rally) & BoE/BoC/Riksbank all "blinking" as FX appreciation + no global inflation allows central banks to turn dovish."

Acting as a backdrop meanwhile, the benchmark S&P 500 was fighting to close the week higher as well.

1608: As a first area of technical support, euro/dollar has its 200-day moving average at 1.2009, although Webfg UK's chief technical analyst Jose Maria Rodriguez cautions it might slip as far as the 1.19 area in the current movement.

1600: The University of Michigan's consumer confidence index for April (final reading) prints at 98.8 (consensus: 98.0), down from 101.4 at the March end, led lower by souring assessments of current conditions.

On the equity side, last night's crop of tech firms reporting are all moving higher: Amazon.com (5.04%), Intel Corp. (1.49%) and Microsoft (0.92%).

1545: The yield on the benchmark 10-year note is down by one basis point at 2.79%.

1440: Cable down 1.16% at 1.37567.

1430: US GDP prints at 2.3% for first quarter, versus 2.9% in Q4 (consensus: 2.0%).

Core PCE up by 2.5% annualised (consensus: 2.4%). Headline PCE prints at 2.7%, unchanged from the prior quarter.

1429: RBS reportedly pushes back Bank Rate hike call from May to August.

1215: The pound is continuing to slip and slide lower as traders crunch the implications of the GDP read-out, but Barclays economists are still calling for a May hike.

GBP is down 1.14% on the dollar to 1.3760 and down 0.9% against the euro to 1.1394. While markets' pricing of the the likelihood of a BoE hike in May was just 20%, down from about 50% yesterday and 90% a week ago before Mark Carney's dovish speech, with the market now seeing the next hike in November.

"With volatility in construction mostly to blame for the weakness, and services dragged down in February by temporary softness, we believe today’s release reveals little regarding whether the underlying trend has changed or not," say economists Sreekala Kochugovindan and Fabrice Montagne.

"If the MPC believed in March that a hike in May is on the cards, it is in our view still on the cards today. We stick with our call for a hike in May," writes Kochugovindan. Sit tight, she says, as markets react strongly to the morning's print.

"We maintain our expectation of a rate hike in May on the grounds that the MPC will have sufficient reasons to believe that Q1 soft data are temporary and that the underlying trend, in their view, is still somewhere slightly above potential. Whether Q2 data make up completely for Q1 weakness remains to be seen, but these are in our view considerations regarding the likelihood of further hikes beyond May."

1118: After UK GDP slowed to 0.1%, forex expert David Lamb at Fexco, says: “No amount of squabbling over how much of a factor the extreme weather was can mask one blunt truth – Britain’s economy is slowing badly.

“Suddenly Britain’s growth looks brittle and bruised. The Bank of England, which barely a month ago was hinting bullishly at a May interest rate rise, will now be very wary of doing anything that could jeopardise things further.

“With inflation falling of its own accord, the chances of a May rate rise have all but evaporated. The Bank’s rate setting grandees will want to see what happens to economic growth in the second quarter of the year before committing to a rate rise – meaning a hike is now unlikely to come until Autumn."

1115: Asian and European equities have gained as Kim Jong Un became the first North Korean leader to ever enter the South, shaking hands with Moon Jae-In over an official end to the war this year.

The Bank of Japan gave itself breathing room by removing the time horizon for inflation hitting 2%, before attention turned to Europe where a much weaker than a expected GDP number in the UK hit Bank of England rate hike expectations and therefor the pound and lifted government bonds. GBP is down 0.9% to $1.3792 and 0.7% to €1.1416, while Gilts are rallying across the yield curve.

Energy commodities lower, metals a tad higher but gold is flat today.

1114: Eurozone economic sentiment was unchanged in April, the European Commission is reporting, which "provides further reassurance that the weakness of activity in Q1 does not mark the start of a sharp slowdown", says Capital Economics.

1110: After UK GDP growth in the first quarter slowed to 0.1% from 0.4% at the end of last year, markets are currently pricing 6bp rate hike for May versus 14bp before the GDP data and around 22bp early last week before Mark Carney’s dovish speech, notes TD Securities.

The dollar remains on its front foot with sterling now bearing the brunt of dollar strength. Says TD: "We have closed our short EURGBP position as the UK economic backdrop has deteriorated and domestic Brexit tensions have intensified. The cross remained strikingly resilient despite a significant deterioration in Euro area growth dynamics in recent weeks."

Emerging markets forex are still under pressure too. "We look for opportunities to jump on longs when the time comes to fade USD bullish momentum," says TD.

0945: UK economic growth in the first quarter was the worst in more than five years, ONS data shows, undermining the case for a Bank of England rate hike next month.

GDP grew 0.1% in the first three months of the year compared to the preceding month, down from 0.4% in the fourth quarter and well below the 0.3% consensus forecast. It was the weakest quarterly growth since the end of 2012.

0859: Friday's London open market report has stocks nudging higher in early trade as investors eyed the release of first-quarter economic growth figures from the UK and the US, with RBS in the red after its latest earnings.

A few minutes ago, the FTSE 100 was up 0.1% to 7,428.91, while the pound was down 0.2% against the dollar at 1.3887 and flat versus the euro at 1.1504.