By FX Empire.com
The GBP/USD fluctuated heavily with the beginning of the week with the lack of UK data and continued focus on the debt crisis in Europe and the means to contain the crisis.
Comments from Germany that expectations for a quick fix in the coming October 23 summit are not realistic suppressed the hope fueled from the G20 commitment to contain the spreading crisis and accordingly powered the dollar over sterling.
More downside pressure came after Ernst & Young ITEM Club downgraded its 2011 GDP forecast for UK to 0.9% from 1.4% and for 2012 were lowered to 1.5% from 2.2%.
They see the economy to still expand less than expected even after the 75 billion pounds expansion in asset purchases. The data on Tuesday will also be important as inflation continues to be more downside pressure
CPI and RPI data will grab attention at 08:30 GMT where expectations refer to a rise in CPI annual reading for Sep. to 4.9% from the prior 4.5%. The data is predicted to have an impact on the pair if it came much higher or lower than forecasts. The latest expectations for the BoE referred to a possible rise in inflation to around 5%, noting that the latest expansion in the APF will probably lead to further rise in inflation.
The main focus in the U.S.will also be on inflation data with the release of PPI at 12:30 GMT, where the annual reading excluding food and energy will inch down to 2.4% in Sep. from 2.5% in Aug., according to median forecasts. On the other hand, Switzerlandhas no releases.
