By FX Empire.com
On Thursday, the GBP/USD pair continued its rise after showing a slight decline on Wednesday to hover around seven-week high as the improvement in risk sentiment, after the European debt-relief accord and upbeat U.S. data, enhanced demand on high-yielding and risky assets while the dollar, on the other hand, was damped as a favorite refuge.
The market reacted positively to the agreement between European leaders to make private sector bondholders to bare 50% of losses of Greek debt to cut the Greek debt by 100 billion euros, while leveraging the firepower of the EFSF to 1 trillion euros from the current 440 billion euros.
Other findings of the summit included measures on bank recapitalization which will reach 106 billion euros, bigger role for the International Monetary Fund in addition to a commitment from Italy to do more effort to slash its huge budget deficit while the European Central Bank will maintain bond purchases.
Moreover, the optimisticU.S.data added to the positive sentiment as the U.S. economy grew 2.5%, the fastest pace in a year, from the second quarter’s expansion of 1.3%. Also, initial jobless claims fell by 2,000 to 402,000 in the week ended October 22, showing improvement in the labor sector.
However, the outlook for the British economy remained clouded with uncertainty as policymaker Paul Fisher said on Thursday there is a high probability the U.K. could experience another recession and the BoE may add further to stimulus after the current round is completed.
The week ends with the release of no fundamentals from the U.K., while in the U.S. personal income and spending will be under scrutiny at 12:30 GMT, followed by University of Michigan confidence will show a rise to 58.0 in Oct. from the prior 57.5.
Data is expected to have an impact on the pair’s movements as investors will keep an eye lid on data from theU.S.to see whether the world’s largest economy will be able to lead global economies to a rebound amid the current sluggish global growth.
Read more Forex Market Updates here.
