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LONDON (ShareCast) - Sterling's progress came to a shuddering halt Tuesday morning (NASDAQ: TUES - news) after Q1 GDP came in worse than expected at -2.4%.

Howard Archer, chief UK economist at IHS Global Insight, called today's numbers "shocking", but says things have moved on since the first quarter. The market thought so too as the Sterling Rate index dropped from its highest levels since last October, dropping from 84.71, to a low of 83.82.

This sudden decline has opened up the potential for a possible double top around the 84.60/70 area, with an ascending trend line coming in at 83.40. A break of 83.40 support, could open up a test of the next trend line at 81.35/40, while a break of resistance around 84.60/70 targets 87.00.

Sterling also dropped against the dollar after making a high of 1.6745; it dropped over 2 cents to trade around 1.6520, and has continued to drop throughout Wednesday.

The daily close will be the all important signal for Sterling against the dollar. The daily candle currently has a long upper shadow, with a higher high, lower low and lower close with a long lower body, which if confirmed on a daily close, is an extremely bearish signal. This could target the 1.6280 support on a longer term basis.

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