GBP/USD Forecast Dec. 28, 2011, Fundamental Analysis

On Tuesday trading, the markets witnessed thin trading amid the year-end holidays. The pound showed a slight rise against the green currency ahead of the release of U.S. housing and confidence data. 

Meanwhile, eyes will track the latest data from the U.S. to see the progress of the economy as last week’s data provided hopes the U.S. economy will lead the recovery path in 2012 without the need of further stimuli from the Fed.

Later in the day, the U.S. will release S&P/caseShiller for the month of Oct., due at 14:00 GMT, which is predicted to record -0.20% from the prior -0.50%, followed by consumer confidence, available at 15:00 GMT, where analysts forecast a soar to 58.5 in Dec. from 56.0 a month earlier.  

In the U.K, the markets are closed due to the Boxing Day holiday. Still, the outlook remains clouded with uncertainty as King said last week debt crisis will threat the real economy recovery while the latest announcement by officials referred that the outlook for the British economy will largely depend on the latest developments in the euro zone.

With mounting expectations the BoE will add to stimulus as early as in 2012, the pound remains under pressure from expected oversupply. Thus, in 2012, the situation in the U.S. seems to be much better than the U.K. along with the refuge merit of the dollar which suggest further decline for the pound versus the greenback. 

On Wednesday, both economies lack fundamentals and therefore the pair is predicted to follow the general sentiment in the market.