On Tuesday trading, the pair showed decline for the second day, despite the improvement in the general sentiment, on expected boost in the Asset Purchase facility by the BoE to spur economic growth and after the release of downbeat U.S. growth data and
The recovery in risk appetite damped demand on the dollar as a safe haven earlier on Tuesday as the three top rating agencies S&P, Moody’s and Fitch kept their rating for the U.S. unchanged despite the failure of the Congress to reach an agreement on budget cuts, where the spending reduction will be at $1.2 trillion.
However, the pound weakened on expectations the BoE minutes, due on Wednesday, will show that the bank is ready to pump more money to bolster the anemic growth. David Cameron mentioned on Monday that theU.K.is “well behind” where it needs to be on economic growth.
The pound retreated despite the data showing that U.K.’s budget deficit narrowed in October on the back of the cut in spending, especially at government departments. Net borrowing excluding support for banks slipped to 6.5 billion pounds from the revised 13.0 billion pounds and 7.7 billion pounds a year earlier. Yet, net debt jumped to 966.6 billion pounds, or 62.3 percent of gross domestic product, to put pressure on the government that aims to slash the deficit of 9 percent of economic output by the year 2015.
In theU.S., growth data missed analysts forecasts as the second estimate for the annualized Gross Domestic Product for the third quarter of 2011 was downwardly revised to 2.0% from the compared with the first reading and median estimates of 2.5%.
Meanwhile, the main focus this week has shifted to the U.S. after remaining on the euro zone over the past few weeks. Yet, investors remain alert to the latest developments in the euro area especially amid the political changes encountering some of the region’s highly indebted countries.
Standard & Poor’s rating agency said the results of the Spanish general elections which witnessed the win of the Popular party with an overwhelming majority will not affect the country’s credit rating, yet it maintained its negative outlook due to the bad economic situation.
On Wednesday, attention will be toward BoE minutes, due at09:30 GMT, 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 at12:00 GMT while will be followed by durable goods and personal spending at13:30 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 at13:30 GMT. Thereafter, at14:55 GMT, University of Michigan confidence will show a rise to 64.5 in Nov. from the prior 64.2.
Originally posted here
