On Tuesday, the pair fluctuated amid hopes and fears before the European second summit on Wednesday. Some believes that European leaders are coming closer to launching a comprehensive plan on Wednesday while others see that there are still some hurdles.
Still, the main focus is on the European summit results after discussions that took place on Saturday. Also on Wednesday, German Chancellor Angela Merkel is looking forward to approving the expansion of the European Financial Stability Facility (EFSF) firepower in lower house of parliament for new EU summit measures.
Juergen Trittin, co-leader ofGermany’s opposition Greens Party, said European leaders are seeking to recapitalize banks with roughly 100 billion euros while bolstering the EFSF to more than 1 trillion euros.
Moreover, data from the U.S. showed that home prices slipped 3.8% from August 2010.
On the other hand, the latest announcements by BoE officials raised concerns regarding the outlook for the British economy. BoE policymaker Martin Weale said on Monday there is a possibility that the economy could witness contraction in the fourth quarter, while King said the bank was very close to restarting APF program in September yet they preferred to delay decision to October to see if volatility in financial markets would calm down.
Thus, the pound may come once again under pressure after reaching six- week high against the dollar this week.
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