Forex Focus: The pound vs the euro shows a clear leader The stock market didn't react and sterling actually dipped against the US dollar and the euro. We immediately saw sterling go 'pop' as the market had managed to convince itself that growth was going to be better than the predictions. But the data was very positive when compared to the anaemic growth seen in prior quarters, and should help underpin sterling," said Charles Purdy from Smart Currency Exchange (www.smartcurrencyexchange.com). And Jeremy Cook of World First (www.worldfirst.com) pointed out: "This is a figure that shows that we are on the mend but the situation is still very, very fragile." Marcus Bullus from MB Capital (www.mbcapital.co.uk) agreed. "The UK economy is on a stronger footing but there are still numerous challenges, not least from stubbornly high inflation and static or negative wage growth, both of which will inhibit spending," he said. The eurozone economy remains very fragile and, as our major export market, its weakness clearly threatens our own economy. One reason the response was so muted is that everyone is worried about what the Bank of England will do under Governor Mark Carney's rule. The threat of more quantitative easing has not gone away and everyone knows that if this happens, it will push the pound lower. Ashley Skinner from Currencies Direct (www.currenciesdirect.com) said: "We are seeing a two-speed Europe start to become more apparent as the raging debt crisis continues. The lack of growth and inability of bailed-out nations to meet their tough austerity measures will affect euro confidence, especially as the UK continues to grow in line with forecasts. The latest figures from the official agency Eurostat show eurozone debts getting worse. In the first quarter of the year, eurozone government debt rose to 92.2 per cent of GDP, up from 90.6. Look under the lid and it's even worse, with Greece at 160.5 per cent, Italy at 130.3 per cent and Portugal at 127.2 per cent. If this summer is anything like last year's we could see strikes and protests break out across the Continent, especially as youth unemployment is running at extremely high levels in countries like Spain and Greece. The economic wellbeing of the beleaguered eurozone remains far from certain. Better-than-expected manufacturing and services data does little to paper over the cracks of burgeoning sovereign debt, general strikes, rioting and political turmoil. Sadly, the only light at the end of the tunnel seems to be a fast approaching train," said Jason Gaywood of HiFX (www.hifx.co.uk). Politics will play its part. With Germany facing an election in October, talk of splitting the eurozone or of some states leaving the bloc could become louder. "Some Germans are unhappy at having to fork out to protect the South, whilst some Greeks are angry with the ECB for imposing such tough austerity measures on their country," said Ferry Woodard. No wonder the consensus is for the euro to remain weak throughout the summer months. Sterling may even benefit by becoming a safe haven currency again. "A recently spritely sterling is likely to continue to strengthen gradually from here against both the euro and the dollar with 1.1900 and 1.5600 respectively being the next targets for each currency pair," predicted Gaywood. Get free guidance when sending money abroad with Telegraph International Money Transfers