By FX Empire.com
The pair showed an incline on Thursday trading on hopes Greece and Italy are close to achieving political stability which spurred demand on the pound as a high-yield currency.
After Prime Minister Silvio Berlusconi offered to step down after the approval of the austerity measures needed to cut the euro area’s second-largest budget shortfall, Fabrizio Cicchitto, head of the parliamentary group of Berlusconi’s People of Freedom, said his party is discussing the formation of an interim government led by former European commissioner Mario Monti as well as early elections, providing hopes the debt-mired economy will find political stability soon.
In addition, Italy sold today 5 billion euros of one-year treasuries with yield of 6.087 percent, the highest since 1997, where after the auction the yield on 10-year bond eased below 7%.
On the other hand, The Greek President’s office said on Thursday that Lucas Papandemos, a former ECB vice-president, will lead the new crisis coalition and they will be sworn in on Friday at 12:00 GMT.
Moreover, upbeat data from the U.S. added positivity to the sentiment as trade deficit narrowed to 43.1 billion pounds in Sep. from the revised 44.9 billion pounds in August, and initial jobless claims for the week ended Nov. 5 retreated to 390,000 from 400,000.
On the other hand, the BoE rate decision announcement did not have much impact on the pair as the decision which included holding both interest rate and APF steady in Nov. was expected.
On Friday, The week ends with the release of U.K. PPI for Oct. will be released at 09:30 GMT. While the U.S. will release University of Michigan confidence, at 14:55 GMT, which is estimated to slide to 60.0 in Nov. compared with the prior reading of 60.9.
The data is predicted to have an impact on the pair, yet the main focus will remain on the latest developments from the euro zone.
Originally posted here
