Investing.com - The pound ended the week near seven-week highs against the broadly weaker dollar on Friday as concerns that slowing global growth could delay a U.S. rate hike pressured the greenback lower across the board.
GBP/USD hit highs of 1.5722, the most since July 1 and was last at 1.5691, little changed for the day.
The dollar fell more than 1% against the euro and the yen on Friday as weak factory data from China added to concerns over slowing global growth and reinforced expectations that the Federal Reserve may delay hiking interest rates.
Manufacturing activity in China contracted at the fastest rate in six-and-a-half years in August, a report showed, exacerbating fears over a slowdown in the world’s second-largest economy.
Financial markets have been roiled since China devalued the yuan on August 11, sparking a selloff in equities, commodities and emerging-market assets.
Wednesday’s minutes of the Federal Reserve’s July meeting indicated that there was little consensuses on when to start raising interest rates, prompting investors to push back expectations for a rate hike.
Fed officials believe the economy is nearing the point where interest rates should move higher, but noted that the subdued U.S. inflation outlook inflation and weakness in the global economy could still pose risks to the U.S. economic outlook.
Demand for sterling continued to be underpinned after an uptick in inflation and comments by outgoing Bank of England policymaker David Miles who said Tuesday that a rate hike is coming "pretty soon" boosted expectations for higher interest rates.
But the pound was sharply lower against the stronger euro, with EUR/GBP jumping 1.29% to 0.7255.
The single currency received an additional boost after data showed that euro zone private sector growth unexpectedly accelerated this month as new orders rose.
The preliminary reading of the euro area’s composite index, which covers both the manufacturing and service sectors, rose to 54.1 this month from July's 53.9. Economists had expected the index to tick down to 53.8.
The US dollar index, which tracks the greenback against a basket of six major rivals, was down 0.97% to a five-week low of 94.84.
In recent months the dollar had been boosted by expectations that the improving U.S. economy would prompt the Fed to raise borrowing costs as soon as September.
In the week ahead, investors will be looking ahead to Wednesday’s data on U.S. durable goods orders for a fresh reading on the strength of the economy. A speech on Monday by Atlanta Fed President Dennis Lockhart will also be closely watched.
Revised data from both the U.S. and the U.K. on second quarter growth 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.
Monday, August 24
Federal Reserve Bank of Atlanta President Dennis Lockhart is to speak; his comments will be closely watched.
Tuesday, August 25
The U.S. is to release private sector data on consumer confidence and a report on new home sales.
Wednesday, August 26
The U.S. is to release data on durable goods orders.
Thursday, August 27
The U.S. is to release revised data on second quarter economic growth, as well as the weekly report on initial jobless claims and pending home sales.
Friday, August 28
The U.K. is to release revised data on second quarter economic growth.
The U.S. is to round up the week with data on the goods trade balance, personal income and spending and revised data on consumer sentiment.