By FX Empire.com

The pair fell for the third day amid tensions from the euro area and worse than expected data from the U.K.

Worries are still persisting from the euro area, especially after the European Commission President Jose Barroso said the euro zone is facing a “truly systemic crisis.”

The announcement reignited fears after the tensions have eased following the intervention by the ECB, which bought Italian and Spanish bonds, according to people familiar with trading who declined to be identified. Italian 10-year bond yield retreated below 7%, while their Spanish counterpart fell to 6.23%.

Thus, the political changes in Italy and Greece did not manage to calm down markets.

In the U.K., the pound fell after U.K. unemployment climbed to the highest level in 15 years to 8.3% in the three months ended September, exceeding both analysts’ forecasts and the previous readings of 8.1% and 8.2%, where the number of youth (from 16 to 24 years old) increased by 67,000 to 1.02 million.

The data added to concern more pressure on officials to boost the stimulus further after adding 75 billion pounds in October, especially as inflation rate slowed down to 5.0% in October.

In the inflation report, the BoE said growth outlook is now weaker and inflation will fall sharply over 2012, highlighting that the outlook for both growth and inflation is likely to depend on the latest developments in the euro zone.

On Thursday, at 08:30 GMT, the UK will release retail sales for Oct.; analysts are predicting a decline of 0.2% in the reading with auto fuel from the 0.6% advance recorded a month earlier.

For the US, eyes will be on a batch of US data including housing data with the release housing starts and building permits for Oct. at 13:30 GMT as it will provide evidence about the status of the housing market that triggered the 2008 crisis. Housing starts are predicted to retreat to 610,000 from 658,000 a month earlier, while building permits is set to soar to 600,000 from 594,000. At the same time the US, initial jobless claims for the week ending Nov. 11 and continuing claims for the week ended Nov. 4 will be available. Thereafter, particularly at 15:00 GMT, Philadelphia Fed will be out.

Data from both economies are expected to affect the pair’s movements, yet the main focus remains on the latest developments from the 17 nations using the common currency.

Originally posted here