By FX Empire.com

On Wednesday, the pair continued its drop for the third day amid tensions spreading in markets which empowered demand on the greenback as a refuge.

Concerns aggravated the debt contagion is spreading among the euro region’s largest economies after the rise in German bond yields and decline in demand.

The euro area’s biggest economy did not manage to receive bids of 35% of the 10-year bonds, while the 30-year notes surged to two-week high where the sale came at 3.889 billion euros, below the maximum target of 6 billion euros.

Moreover, fears of facing another recession increased with the release of weak manufacturing reports which showed that the contraction in the euro zone deepened to 46.4 in Nov. from 47.1 in Oct, according to the PMI gauge.

Also, Chinese HSBC services PMI started the day with pessimism as manufacturing showed a contraction of 48.30 in Nov. from 51.1 a month before.

In the U.S., data added to worries as durable goods orders fell 0.7% from the previous 1.5% drop, personal spending recorded 0.1% advance in Oct. compared with 0.7% a month earlier and initial jobless claims showed increase to 393,000 in the week ended Nov. 19 while the prior reading was revised up to 391,000 from the initial 388,000.

Moreover, the pound showed decline after the release of BoE minutes which showed that a unanimous vote 9-0 for keeping both interest rate and stimulus steady at 0.50% and 275 billion pounds this month.

The latest forecasts by officials refer to a slowdown in growth and inflation which increases speculations policy makers will continue their expansion in the stimulus to boost recovery, thereby lowering demand on the sterling on expected oversupply in markets.

On Thursday, 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, noting that the main focus will be probably on the latest developments from the euro area which has been grabbing investor’s attention over the past few weeks.

Originally posted here