Investing.com - The pound fell to five-year lows against the dollar on Friday as disappointing data on U.K. industrial production and uncertainty ahead of next month’s general elections weighed.
The drop in the pound came after official data showed that U.K. industrial output was weaker than expected in February. The Office of National Statistics said industrial production edged up 0.1%, undershooting forecasts of a 0.4% gain.
The ONS attributed the disappointing data to a 12% annual decline in oil and gas production in February, the largest drop since August 2013.
Manufacturing output rose 0.4%, in line with expectations.
The soft data sparked concerns over the outlook for first quarter growth, sending sterling lower.
The pound has already come under pressure amid concerns that the 7 May election will result in a hung parliament.
GBP/USD touched lows of 1.4587 following the release of the data, before settling at 1.4632 in late trade. The pair ended the week down 1.93%.
Demand for the greenback continued to be underpinned by expectations for higher interest rates, as investors regained confidence that the U.S. economy would continue to recover after recent economic reports pointed to a slowdown at the start of the year.
The greenback received a boost earlier in the week after comments by the presidents of the New York and Richmond Federal Reserve banks made the case for the Fed to begin policy tightening as early as the summer.
Some investors had pushed back the timing of a rate hike until late 2015 after a surprisingly weak U.S. employment report for March.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was up 0.38% to 99.63 late Friday. The index gained 2.89% for the week.
In the week ahead, U.S. data on retail sales, inflation and consumer sentiment will be closely watched for further indications on the strength of the recovery. Tuesday’s U.K. inflation report and Friday’s jobs report will also be in focus.
Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets. The guide skips Monday as there are no relevant events.
Tuesday, April 14
The U.K. is to release data on consumer price inflation.
Later in the day, the U.S. is to release data on retail sales and producer prices.
Wednesday, April 15
The U.S. is to release reports on industrial production and manufacturing activity in New York state.
Thursday, April 16
The U.S. is to release a string of reports, including jobless claims, building permits, housing starts and manufacturing activity in the Philadelphia region.
Friday, April 17
The U.K is to release its latest employment report.
The U.S. is to round up the week with data on consumer prices and consumer sentiment.