Sterling slides overnight
The pound has tumbled against the dollar ahead of the growth figures from the US at 1.30pm (London time) that will be the acid test for the US recovery.
Before the US growth figures are released, the UK mortgage approvals announcement at 9.30am will be the focus of the morning trading session. The market is expecting a slight increase from 59,000 in November to 60,000 in December. The UK property market is beginning to cool off, and a soft figure will put pressure on the pound.
As I previously stated, the US is in the lead when it comes to which country will increase interest rates first, and the advance GDP reading will paint a clearer picture. The consensus is for a reading of 3% for the final quarter of 2014, and should expectations be met it will trigger short-term dollar buying.
After making a number of unsuccessful attempts to break through the $1.52 level during the week, the pound drifted back to its previous support level of $1.50. It is currently trading near the middle of this range and the bias is to the downside. There has been consolidation in the $1.5080 area, and the 200-hour moving average is acting as resistance at $1.51. If the level is held then $1.50 will be in sight.