GBP/USD Forecast Dec. 06, 2011, Fundamental Analysis

The better than expected PMI services from the United Kingdom in November helped sterling sustain further gains against the dollar which was further supported by the prevailing risk appetite in the market.

The data from UK eased the woes over the state of the economy and the extent of damage from the spreading debt crisis that worsened in the past period, where the expansion in the critical sector eased the fears over the recession spreading rapidly to the United Kingdom and further pinned that the BOE will not take action this month on the APF.

We can still see high volatility for the pair as it remains very vulnerable to the market sentiment and on Tuesday we expect sterling to continue to trade inline with the prevailing trend for risky assets and as the sentiment improves the pair will be able to extend the gains, though trading will likely remain choppy.

The lack of data from both the United Kingdom and the U.S. will keep the European debt crisis the main topic and as investors’ sentiment improves further on hope that Europe this week will take decisive action the odds will continue to favor sterling for further gains.

Both economies lack economic fundamentals which propose that there would be calm trading on the pair which is predicted to follow the general trend in market as it will not able to get direction from data.

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