GBP/USD Forecast Dec. 20, 2011, Fundamental Analysis

GBP/USD Forecast Dec. 20, 2011, Fundamental Analysis
GBP/USD Forecast Dec. 20, 2011, Fundamental Analysis

On Monday, the pair showed a drop amid concerns in markets before the end of the year on expected relapse into recession to the U.K. economy and expected escalation in the euro area debt crisis.

Concerns aggravated after the death of North Korea’s Kim Jong II triggered worries on possible disputes in this hot spot.

However, still the main focus in the market is on the latest developments from the euro area as many euro zone economies gird for bond selling this week.

Worries spread in markets after Fitch cut France’s outlook put a number of countries including Spain and Italy under review for a possible downgrade.

On the other hand, ECB’s Mario Draghi said to the Financial Times on Sunday the ECB can not overstep its mandate, lowering expectations the ECB will increase purchases of bonds.

This week, the main focus will be on GDP final reading from both economies, BoE minutes from the U.K. and housing data from addition to other important news.

Also, eyes will be on bond selling by large economies to test their ability to calm down markets.

On Tuesday, the U.K. will release Gfk consumer confidence survey for Dec. and nationwide consumer confidence for Nov. will be available at 00:01 where the former is predicted to linger at -31 while the later will steady at 36. At 11:00 GMT, U.K. CBI trends total orders for Dec. will be out, yet the news is not expected to have a significant impact on the pair’s movements.

The main focus in the U.S. will be housing starts and building permits for Nov. due at 13:30 GMT which will provide evidence about the status of the housing market that triggered the 2008 crisis. Housing starts are expected to decrease to 630,000 from 628,000 in Oct., while building permits will probably show a fall to 633,000 from the prior 653,000.

The news from both economies is expected to affect the pair’s movements yet any news from the euro area is likely to affect the pair also.

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