By FX Empire.com
In the week ended Nov 18, the GBP/USD showed decline for the third week as the tensions stemming from the euro area enhanced demand on the dollar as a refuge.
The rise in Spanish and French bond yields on the back of the soar of Italian 10-year notes above 7%, the highest since the inception of the euro, triggered concerns the debt contagion is spreading among the euro region’s largest economies.
The political changes taking place in the region’s highly indebted nations, namely Greece and Italy, could not allay fears, especially amid disputes between European leaders regarding the role of the ECB to counter crisis and the veil of details of expanding the EFSF rescue fund so far.
In the U.K., the Bank of England (BoE) said in its quarterly inflation report raised concerns as it mentioned that growth outlook is now weaker and inflation will fall sharply over 2012, referring that the outlook for both growth and inflation is likely to depend on the latest developments in the euro zone.
However, the improvement in the U.S. data managed to ease some of the tensions in the market, yet it did not shift the sentiment as the main concern meanwhile is on the euro zone as investors believe the debt crisis may drag global economies into another recession as well as financial turbulences.
This week, the main focus will be on 3q GDP preliminary reading, BoE minutes and public finance data. In theU.S., the main highlight will be GDP 3q annualized second reading, minutes of FOMC meeting and other important data.
The release of the data this week will be as follows:
Monday Nov 21:
While the U.K. economy lacks fundamentals, as of 15:00 GMT, the U.S. will release existing home sales which are estimated to record 2.2% drop in Oct. compared with a prior of -3.0%.
Tuesday Nov 22:
At 09:30 GMT, public finance excluding interventions will be due with expectations referring to a narrowing in deficit to 6.6 billion pounds in Oct. from the prior 14.1 billion pounds.
In the U.S., the main focus will be on the main highlight of the week which is GDP annualized for the third quarter (second reading), which is predicted to remain unrevised at 2.5%, where it will be available at 13:30 GMT. Thereafter, the concentration will shift to minutes of the FOMC meeting due at 19:00 GMT.
Wednesday Nov 23:
Attention will be toward BoE minutes, due at 09:30 GMT, release which may show a split among policy makers as some may have supported more stimulus to boost the economy amid the sluggish recovery pace. At the same time, U.K. BBA loans for house purchase for the month of Oct. will be released.
For the U.S., eyes will be on MBA mortgage applications for Nov. 18 at 12:00 GMT while will be followed by durable goods and personal spending at 13:30 GMT. Durable goods report is predicted to show a drop of 1.0% in Oct. from the prior 0.8% drop, while personal spending will signal a drop to 0.3% in Oct. from 0.6% in Sep.
Due to thanks giving holiday on Thursday, initial jobless claims for the week ending Nov. 19 and continuing claims for the week ending Nov. 11 will be available at 13:30 GMT. Thereafter, at 14:55 GMT, University of Michigan confidence will show a rise to 64.5 in Nov. from the prior 64.2.
Thursday Nov 24:
The U.K. will release 3q GDP preliminary reading which is estimated to remain unrevised at 0.5%. At 11:00 GMT, CBI trends total orders for Oct. will be out, yet the news is not expected to have a significant impact on the pair’s movements.
However, trading on the pair may be calm due to thanks giving holiday.
Friday Nov 25:
The week ends with the release of no data from both economies which suggest that the pair will follow the general sentiment in market.
Originally posted here
