Latest figures from the Office for National Statistics show that the British economy grew by 0.4% in the three months through December, improving on the previous reading of 0.3%. GDP in volume terms fell by 4.9% during 2009, the largest fall on record, compared with a rise of 0.5% in 2008.

The total volume of output in the production industries rose by 0.4%, within which manufacturing output rose by 0.8%.

The household saving ratio was 7.0% in the latest quarter, compared with 8.4% in the previous quarter.

Real household disposable income fell by 1.0% in the latest quarter, following a 0.6% increase in 2009 quarter three.

The markets did not expect the growth in the economy and so the pound has made gains against most of its counterparts.

Duncan Higgins, senior analyst at Caxton FX said: “It is encouraging to see that the UK economy is showing some positive signs