ForexLive European Wrap; A Barrier Busting Session Following Strong German IFO and Weak Q4 UK GDP Releases

  UKQ4 GBP -0.3% M/M From Q3 unchanged  at +0.9%. Expectations  were originally  for -0.1/-0.2%  at the beginning of the week. Unchanged on the y/y (Reuters calling for  +0.2%) German January IFO Business Climate Indicator 104.2 From 102.4 in December and above  expectations of 103.00 IFO Economist Wohlrabe: Sees Quarterly Economic Growth Of 0.2% In Q1, Recession Looking Unlikely ECB's Draghi: 2012 was interesting ' to say the least' More Draghi: Eurozone deposit guarantee still 'some way out' Bk of Italy Governor:  Monti Paschi is under investigation Italy's PM Monti: Risk that a strong euro could harm exports EU's Reding: UKwill lose a lot if it leaves the EU China's XI:China's position over the Diaoyu island is clear and consistent Britain must commit to building an economic future with China Rifts Over Cyprus Bailout Feed Broader Fears.. Well we all knew it wouldn't be a quiet session, (that's why Gerry took the day off!). The lull in Asia was rudely broken on Europe's arrival with the EUR/USD around 1.3360 when I sat down and proceeded to head higher pretty much immediately along with EUR/GBP on anticipation of a strong IFO reading for Germany. Barriers were taken out  at 1.3400 ahead of a confirmed stronger German IFO and the move continued after UK Q4 GDP came in weak (somewhat expected) prompting more EUR/GBP buying and flushing another barrier at 1.3450 (high 1.3452) before some profit taking set in.  Buy stops now sit on a break of 1.3460 EUR/GBP took out 0.8500 (because Gerry said it would) and looks intent on taking the next one at 0.8550 (high so far 0.8537) A similar story in EUR/JPY with barriers at 121.50 and 122.00 breached to highs of 122.19. USD/JPY was also driven by the EUR/JPY rally taking out the much talked about  top leg of a DNT at 90.75 to 90.92 before running into reportedly huge offers ahead of a 91.00 barrier; another large barrier sits behind at 91.50. Cable was wobbly from the off  but initial support held at 1.5760 and short covering ahead of the GDP release resulted in a move back up through 1.5800 to 1.5824 (Reuters), but the release confirmed suspicions and led a sharp sell-off to lows of  1.5745 before settling in the 1.5760/70 zone. A potential bounce led by a German name was  held back in the low 1.5780's by a rampant EUR/GBP (US Investment house apparently seen buying  in the EUR/GBP mix) AUD/USD was largely left alone in a 1.0447-69 range as EUR/AUD took off to  pastures new, breaking through last Octobers highs (1 .2824) to 1.2868 European bourses were in the black  with the DAX leading the field up over 1% and the FTSE  trailing badly at around +0.1%