Investing.com - The pound ended the week close to two-month highs against the dollar on Friday after employment and retail sales data out of the U.K. boosted the outlook for the economic recovery.
GBP/USD dipped 0.05% against the dollar to close at 1.5624 on Friday, down from session highs of 1.5655, the highest since June 19 and ended the week 1.09% higher.
Cable is likely to find support at 1.5564, the low of June 18 and resistance at 1.5735.
The dollar edged higher against sterling on Friday after the University of Michigan said its consumer sentiment index fell from a six-year high of 85.1 in July to 80.0 in August. Economists had expected the index to tick up to 85.5.
Separate reports showed that U.S. housing starts rose less-than-expected in July and building permits also fell short of expectations last month.
The data came amid ongoing speculation over how soon the Federal Reserve will start to phase out its bond buying program. Fed Chairman Ben Bernanke has said that the decision to begin tapering the bank’s USD85 billion-a-month asset purchase program will depend on whether economic data is strong enough.
Expectations that the Fed may begin tapering as soon as September were boosted on Thursday after the Department of Labor said the number of people who filed for unemployment assistance in the U.S. fell to the lowest level since January 2008 last week, dropping by 15,000 to 320,000.
The pound remained broadly supported after data showed that U.K. jobless claims fell more than expected in July, while retail sales rose strongly.
Official data on Wednesday showed that the U.K. unemployment rate remained unchanged at 7.8% in June, in line with expectations. The number of people claiming unemployment benefits fell by 29,200 in July, better than expectations for a decline of 15,000.
Separately, the minutes of the Bank of England’s July meeting showed that the decision to provide forward guidance on future rate increases was not unanimous.
Monetary Policy Committee member Martin Weale wanted tougher measures to ensure that the pledge to hold rates at record lows did not lead to a pickup in inflation, but said he accepted the principles of forward guidance.
The minutes showed that policymakers voted unanimously in favor of keeping the bank rate steady at 0.5% and the asset purchase program unchanged at GBP375 billion.
Data on Thursday showed that U.K. retail sales climbed 1.1% in July, beating expectations for a 0.6% gain and were 3% higher from a year earlier, as sunnier summer weather boosted sales of food, alcohol, clothing and outdoor items.
Sterling also ended the week higher against the single currency, with EUR/GBP dropping 0.81% to settle at 0.8530.
In the week ahead, investors will be looking ahead to Wednesday’s minutes of the Federal Reserve’s most recent meeting, while U.S. data on initial jobless claims and the housing sector will also be closely watched.
The U.K. is to produce revised data on second quarter growth.
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 and Tuesday as there are no relevant events on these days.
Wednesday, August 21
The U.K. is to release a report on public sector net borrowing, as well as private sector data on industrial order expectations.
The U.S. is to publish private sector data on existing home sales, a leading indicator of economic health. In addition the Federal Reserve is to publish the minutes of its most recent policy setting meeting.
Thursday, August 22
The U.S. is to release the weekly government report on initial jobless claims.
Friday, August 23
The U.K. is to release revised data on second quarter gross domestic product, as well as private sector data on mortgage approvals.
The U.S. is to round up the week with data on new home sales, a leading indicator of economic health.
GBP/USD dipped 0.05% against the dollar to close at 1.5624 on Friday, down from session highs of 1.5655, the highest since June 19 and ended the week 1.09% higher.
Cable is likely to find support at 1.5564, the low of June 18 and resistance at 1.5735.
The dollar edged higher against sterling on Friday after the University of Michigan said its consumer sentiment index fell from a six-year high of 85.1 in July to 80.0 in August. Economists had expected the index to tick up to 85.5.
Separate reports showed that U.S. housing starts rose less-than-expected in July and building permits also fell short of expectations last month.
The data came amid ongoing speculation over how soon the Federal Reserve will start to phase out its bond buying program. Fed Chairman Ben Bernanke has said that the decision to begin tapering the bank’s USD85 billion-a-month asset purchase program will depend on whether economic data is strong enough.
Expectations that the Fed may begin tapering as soon as September were boosted on Thursday after the Department of Labor said the number of people who filed for unemployment assistance in the U.S. fell to the lowest level since January 2008 last week, dropping by 15,000 to 320,000.
The pound remained broadly supported after data showed that U.K. jobless claims fell more than expected in July, while retail sales rose strongly.
Official data on Wednesday showed that the U.K. unemployment rate remained unchanged at 7.8% in June, in line with expectations. The number of people claiming unemployment benefits fell by 29,200 in July, better than expectations for a decline of 15,000.
Separately, the minutes of the Bank of England’s July meeting showed that the decision to provide forward guidance on future rate increases was not unanimous.
Monetary Policy Committee member Martin Weale wanted tougher measures to ensure that the pledge to hold rates at record lows did not lead to a pickup in inflation, but said he accepted the principles of forward guidance.
The minutes showed that policymakers voted unanimously in favor of keeping the bank rate steady at 0.5% and the asset purchase program unchanged at GBP375 billion.
Data on Thursday showed that U.K. retail sales climbed 1.1% in July, beating expectations for a 0.6% gain and were 3% higher from a year earlier, as sunnier summer weather boosted sales of food, alcohol, clothing and outdoor items.
Sterling also ended the week higher against the single currency, with EUR/GBP dropping 0.81% to settle at 0.8530.
In the week ahead, investors will be looking ahead to Wednesday’s minutes of the Federal Reserve’s most recent meeting, while U.S. data on initial jobless claims and the housing sector will also be closely watched.
The U.K. is to produce revised data on second quarter growth.
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 and Tuesday as there are no relevant events on these days.
Wednesday, August 21
The U.K. is to release a report on public sector net borrowing, as well as private sector data on industrial order expectations.
The U.S. is to publish private sector data on existing home sales, a leading indicator of economic health. In addition the Federal Reserve is to publish the minutes of its most recent policy setting meeting.
Thursday, August 22
The U.S. is to release the weekly government report on initial jobless claims.
Friday, August 23
The U.K. is to release revised data on second quarter gross domestic product, as well as private sector data on mortgage approvals.
The U.S. is to round up the week with data on new home sales, a leading indicator of economic health.