By FX Empire.com
The GBP/USD started the week on Monday under evident downside pressure, especially as the lack of major fundamentals fueled the focus on ongoing debt developments in Europe and the U.S. which supported risk aversion and dollar strength.
The sentiment was weak with the start of trading as the supercommittee in the US failed to reach an agreement on how to cut the $1.2 trillion debt and the euro area continued to sink in its woes of rising yields and difficulty in accessing dollar funding, further assuring that the crisis is worsening.
France was warned by Moody’s and Hungary asked for IMF support all assuring the contagion is spread and that kept the sentiment negative and biased to dollar favor.
More downside pressure on sterling was after house prices dropped and Cameron said that UK is falling behind. Nevertheless, the prime minister did pledge more support to spur growth and a credit easing program to help companies finances and said Osborne will announce the details in the Autumn Statement scheduled for November 29 which if confirmed might offer some interim relief for UK that is struggling amid the downside pressure from the euro debt crisis and slowing global growth.
The volatility will continue to be evident on Tuesday on hope that action in the euro area might offer any relief for traders that are surely avoiding any term of risk. The UK data will add to the volatility with the budget figures and certainly the GDP data from the US will be closely watched and any change might fuel more pessimism.
At 09:30 GMT, public finance excluding interventions will be due with expectations referring to a narrowing in deficit to 6.6 billion pounds in Oct. from the prior 14.1 billion pounds.
In theU.S., the main focus will be on the main highlight of the week which is GDP annualized for the third quarter (second reading), which is predicted to remain unrevised at 2.5%, where it will be available at 13:30 GMT. Thereafter, the concentration will shift to minutes of the FOMC meeting due at 19:00 GMT.
Originally posted here
