The UK economy grew more than expected in the first quarter of 2010 according to official statistics released this morning.

An upward revision to 0.3 per cent from the lacklustre first estimate of 0.2 per cent gave the pound a slight boost - up 0.04 per cent against the euro to 1.1671.

Mark Bolsom, head of the UK trading desk at Travelex, said, ‘Our new Coalition government will welcome this news but growth remains extremely weak and tenuous. With the worry of contagion from the financial crisis in the Eurozone and swingeing public spending cuts already underway, economic recovery remains fragile.’

However, Bolsom believes that the UK economy has some major headwinds to face this year and the pressure on businesses and consumers will not abate.

He adds, ‘With a daunting level of national debt, rising inflation and low interest rates, I don't think the economy will grow much past 1 per cent this year. The real crux of whether we're going to carry on growing depends on the extent to which the forthcoming austerity measures contract the economy. UK economic growth will be determined by events on the 22 June.’