While theU.K.lacks fundamentals, theU.S.will announce monthly budget statement at 19:00 GMT, where expectations refer to a narrow in deficit to $140.0 billion in Nov. from $150.0 billion a month earlier.
The pair is expected to follow the general sentiment in the market which will probably continue to track the latest developments in the euro area. With tensions in markets, the dollar is predicted to take the pair lower and vice versa.
This week, the main focus will be on inflation data from both economies in addition to other important data, where attention will be toward the FOMC rate decision.
Last week, the U.K. preferred to act solely as appeared clearly in the EU summit as the U.K. rejected the treaty change as British Prime Minister David Cameron asked for guarantees to protect the financial services industry, where Cameron’s demand was described as “unacceptable” by French President Nicolas Sarkozy.
The BoE, on the other hand, opted to leave interest rate unchanged at 0.50% and stimulus at 275 billion pounds in December, to assess the impact of the 75 billion pounds announced in October.
Also, the BoE said it will introduce a new contingency liquidity facility, in response to the turbulences engulfing financial markets, where this facility would allow the bank flexibility in offering sterling liquidity on short term basis in case of any shortage stemming from the volatility in markets.
Still, uncertainty from the euro area debt crisis is largely determining the outlook for U.K., as mentioned recently by many U.K. officials.
Originally posted here
