On Wednesday trading, the markets witnessed thin trading amid the year-end holidays. Yet, the pound showed a slight advance against the green currency after a successful bond selling in Italy managed to restore confidence and thereby damp demand on the dollar as a refuge.
The latest announcements byU.K.officials referred that the outlook for the British economy will depend on the latest developments in the euro area, thus the pound is expected to be affected by euro zone news and data.
The Italian Treasury sold 9 billion euros of 179-day bills, where the demand increased to 1.7 times, compared to 1.47 times in the last auction while the borrowing cost retreated to 3.251% from the previous auction’s rate of 6.504%. Also, 2013 bills were sold for 1.733 billion euros with a yield of 4.853% from the prior auction’s rate of 7.814%.
On Thursday, theU.S.economy will release initial jobless claims for the week ended Dec. 24 and continuing claims for the week ended Dec. 16 at 13:30 GMT. At 14:45 GMT,Chicagopurchasing manger is estimated to retreat to 60.2 in Dec. from the previous 62.6. 15 minutes later, pending home sales for Nov. will signal 1.8% advance compared with the preceding 10.4% rise.
The data is expected to affect the pair’s movements yet eyes will be on the selling of 2014, 2018, 2021 and 2022 bills by the Italian Treasury, especially the 10-year notes which recorded a yield of nearly 7% in the last auction, a rate which triggered the ask for a bailout by Greece and Portugal.
With mounting expectations the BoE will add to stimulus as early as in 2012, the pound remains under pressure from expected oversupply.