On Tuesday trading, amid the absence of data from both economies, the pair followed the general sentiment in the market which is fueled with concerns after Standard & Poor’s warned the euro-area nations with a possible credit rating cut in case European leaders failed to quell jitters and tackle the debt crisis during the coming summit on Friday.
S&P also has placed the debt rating of 15 nations of the euro zone on a negative review as S&P said “systemic stresses” are growing up, while credit conditions tighten in the euro zone.
The warning put European leaders under pressure before they gather on Friday in the awaited summit that will probably involve change in treaty to resolve debt crisis.
The jittery situation gave support to the dollar as the most favorite refuge, where eyes will be in the EU summit on Friday to see whether European leaders would be able to introduce stricter budget discipline.
Thereafter, the pound continued its decline after 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.
On Wednesday, at 09:30 GMT, manufacturing and industrial production reports will be available, where manufacturing reading will show 0.2% drop in Oct. from 0.2% in Sep. In theU.S., MBA mortgage applications for Dec. 2 at 12:00 GMT.
The data is expected to affect the pair due its importance, yet it is expected to be also affected by the general sentiment which is tracking the latest developments in the euro region.
Originally posted here
