FTSE to start higher as pound hovers close to 6 week low

A solid finish in Wall Street thanks to an Amazon boosted tech sector, lifted Asian stocks overnight and looks set to work its magic on the open in Europe, as major bourses point to a positive start.

The strong US finish from a rebounding tech sector was then capped off by Amazon surging 7% in after hours trading to an all time high. The move comes following Facebook, Advanced Micro Devices, VISA and PayPal surprising to the upside which snapped the S&P tech sectors 5 day losing streak.

Busy end to the week
Today looks set to be an actioned packed day to end the trading week, with results from RBS, housing price data which could impact on the House builders, first quarter GDP data and an appearance by BoE Governor Mark Carney, not to mention US GDP and a slew of lower impact eurozone stats.

RBS under the spotlight
RBS Q1 figures come following Barclays and Lloyd’s earlier in the week, neither of which inspired buying action. RBS Q4 figures came in below market expectations although the bank did report its first profit in 9 years in February. Investors will be watching carefully for updates on costs and the current restructuring plan. In short, we aren’t expecting any fireworks from RBS today and the current downtrend could be with us a while longer.

UK GDP to kill off last remaining hopes of a rate rise?
Last week the pound dropped hard against the dollar after investors digested a week of soft data, followed by a more dovish a Bank of England Governor Mark Carney. Hopes of a spring rate rise, which had been as high as 89%, have fallen dramatically. A weak UK GDP reading today could kill off any remaining optimism and subsequently keep the pound below $1.40.

That said, there are several other events today, such as as an appearance by BoE Governor, which could still serve to boost or rein in investor hopes for that now not so likely May rate hike and US first quarter GDP release.

US yields ease slightly overnight
Dollar strength has been a major story across this week as US 10 year treasury yields have crossed the 3% psychological barrier for the first time in since January. Higher yields pushed the dollar northwards, touching 91.63 overnight, a 3 1/2month high versus a basket of currencies. Whilst yields pulled back slightly in early trade this morning, GBP/USD was showing its bruises, having fallen below $1.39 for the first time in 6 weeks, whilst EUR/USD remains close to $1.21 its lowest level since early January.

Slowdown in US GDP expected to be temporary
Given the high inflation expectations, investors will be watching the release of the US GDP closely. Economic growth in the first quarter is forecast to have slowed to 2% on an annual basis, down from 2.9%, as consumers spending braked sharply. This is expected to more of a bump in the road rather than the start of a full on change in direction for the US economy, which remains supported by a tightening labour market and sizeable tax cut.

Opening calls
FTSE to open 9 points higher at 7430
DAX to open 60 points higher at 12560
CAC to open 19 points higher at 5474