By FX Empire.com
Sterling slumped heavily with the start of the week amid fears over the outlook for Europe and evident risk aversion that left cautious investors betting on Greenback, forcing sterling to the downside.
The GBP/USD declined heavily amid cautious and skeptic investors which preferred the safety of the dollar over other instruments. The pound is very vulnerable to the stress in the euro area and especially in Italy and that is keeping the downside pressure evident on the pound ahead of key data from the UK this week.
On Tuesday the focus will shift to data with the CPI from the Kingdom that persists above target and will trigger a new letter from King, nonetheless, the effect will be downplayed with the Inflation Report and new growth and inflation projections due Wednesday and the fact that the BoE still sees downside pressure on inflation over the medium term with rising risk that the UK economy might slowdown and even contract in the coming quarters.
CPI and RPI data will grab attention at 09:30 GMT where expectations refer to decline in CPI annual reading for Oct. to 5.1% from the prior 5.2%. The data is predicted to have an impact on the pair if it came much higher or lower than forecasts.
For the US, the main focus will also be on inflation data with the release of PPI at 13:30 GMT, where the annual reading excluding food and energy will rise to 2.9% from 2.5%, according to median forecasts. At the same time, retail sales less and empire manufacturing will be available.
Originally posted here
