On Monday, 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.
Still, the main focus is on the latest developments from the euro area amid the mounting speculations the European debt crisis will cloud global recovery in 2012.
Last week, a bond selling inItalysaw a drop in yield of the 10-year notes to 6.98% compared with 7.56% in the previous auction, yet the rate is considered high since it is the same rate which triggered bailouts forGreeceandPortugal.
On the other hand, the ECB said the balance sheet soared to 2.73 trillion euros, where lending to banks climbed to 879 billion euros in the week ended Dec. 23, raising concerns the ECB will continue its support to banks to avert a financial disaster.
This week, the main focus will be the infamous jobs report in theUnited Statesas well as manufacturing, services and minutes of the FOMC meeting. On the flip side, the British economy will release less important data yet focus will be on PMI manufacturing, services and construction.
Expectations refer to seeing further decline in the pair amid the high demand on the dollar as a favorite safe haven due to the turbulences in European markets. The CBI said on Friday the European debt crisis is performing a significant threat on the U.K. economy.