Daily Insight

A boring day as expected yesterday, and most Americans will be sleeping it off today so I expect a relatively inactive dollar.

Sterling may see some movement on the release of revised Q3 GDP, with some analysts expecting a slight upward revision.

Here's a snippet from yesterday's testimony by BOE govenor Mervyn King, given to the Treasury Select Committee on the November Inflation report.

MERVYN KING

"We will set interest rates on the basis of the outlook for inflation. Nothing more, nothing less."

"So far the committee has drawn great comfort from the fact that we have not seen second round effects so far."

"It is important that there are not these second round effects because if there were that would help to push up inflation relative to our central projection, our central projection does not include any second round effects in the future. If there were to be any, that would push up our inflation projection and other things being equal, which of course in practice they never are, but other things being equal would make it more likely than not that policy would be tightened. That is higher interest rates. And that point is made absolutely explicit in the Inflation Report."

"The Chancellor is certainly right to draw attention to the need in both public and private sectors for earnings growth not to try and compensate for that part of the pick up in inflation that corresponds to higher energy prices."

On export outlook: "Given the exchange rate and the very solid growth of world trade we would expect to see continuing growth in exports."

"We are beginning to see now in the euro area some signs that growth is likely to pick up towards trend."

On housing market: "I think our view is that the housing market is continuing to be broadly stable in terms of prices." He said activity had picked up and that prices had risen a little faster than expected.

GBP USD - Support 1.7200 then 1.7150 and 1.7062
Resistance 1.7260 then 1.7285

GBP EUR - Support 1.4600 then 1.4535/40
Resistance 1.4660/75 then 1.4740

DATA: UK GDP 09:30
US Jobless Claims 14:45