Investing.com - The pound rose to 27-month highs against the dollar on Friday after the Bank of England said Thursday it was rolling back stimulus to the U.K. housing market, adding to indications that the economic recovery is deepening.
GBP/USD hit highs of 1.6383, the highest since late August 2011, before ending Friday’s session at 1.6367. The pair ended the week with gains of 1.24%.
Cable is likely to find support at 1.6275, Thursday’s low and resistance at 1.6475.
The BoE announced Thursday that it is modifying its Funding for Lending Scheme, which was launched last year to boost mortgage lending, in response to what it called “evolving risks” to financial stability.
BoE Governor Mark Carney said the Funding for Lending Scheme will no longer be aimed a house buyers and would only apply to businesses from January 2014.
Carney said an overheated housing market would be a risk to the economy and added that supporting mortgage lending was "no longer necessary".
The data came one day after revised data showed that the rate of growth in the U.K. economy in the third quarter was in line with preliminary estimates.
The Office for National Statistics said its second estimate of U.K. third-quarter gross domestic product was unchanged at 0.8% quarter-on-quarter, while the annual rate of growth was also unchanged at 1.5%.
It was the fastest quarterly rate of growth in over three years. Consumer spending rose by 0.8%, the fastest pace since the second quarter of 2010, the ONS said.
The euro slumped to 10-month lows against the pound on Friday, with EUR/GBP ending Friday’s session at 0.8300, the lowest since January. The pair was down 0.82% for the week.
Elsewhere, sterling ended the week at five year highs against the broadly weaker yen, with GBP/JPY settling at 167.74, the highest level since October 2008. For the week, the pair gained 2.32%.
The yen continued to be pressured by expectations that the Bank of Japan will implement further stimulus measures in order to meet its target of 2% inflation by 2015.
In the week ahead, investors will be focusing on Friday’s U.S. nonfarm payrolls report for November, amid expectations that the Federal Reserve will start to scale back its stimulus program at one of its next few meetings.
Data on the U.K.’s dominant service sector and the latest rate decision by the BoE 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, December 2
Federal Reserve Chairman Ben Bernanke is to speak at an event in Washington. Later Monday, the Institute of Supply Management is to release its manufacturing PMI.
Tuesday, December 3
The U.K. is to release its construction PMI.
Wednesday, December 4
The U.K. is also to publish its services PMI, a leading indicator of economic health.
The U.S. is to release the ADP report on private sector job creation, which leads the government’s nonfarm payrolls report by two days. The Institute of Supply Management is to release its services PMI. The U.S is also to publish data on new home sales and the trade balance, the difference in value between imports and exports.
Thursday, December 5
The BoE is to announce its benchmark interest rate.
The U.S. is to publish a revised estimate of third quarter gross domestic product, the broadest indicator of economic activity and the leading indicator of economic growth. Meanwhile, the Labor Department is to release its weekly report on initial jobless claims. The U.S. is also to publish data on factory orders.
Friday, December 6
The University of Michigan is to release the preliminary reading of its consumer sentiment index. The U.S. is to round up the week with the closely watched government data on nonfarm payrolls and the unemployment rate.
GBP/USD hit highs of 1.6383, the highest since late August 2011, before ending Friday’s session at 1.6367. The pair ended the week with gains of 1.24%.
Cable is likely to find support at 1.6275, Thursday’s low and resistance at 1.6475.
The BoE announced Thursday that it is modifying its Funding for Lending Scheme, which was launched last year to boost mortgage lending, in response to what it called “evolving risks” to financial stability.
BoE Governor Mark Carney said the Funding for Lending Scheme will no longer be aimed a house buyers and would only apply to businesses from January 2014.
Carney said an overheated housing market would be a risk to the economy and added that supporting mortgage lending was "no longer necessary".
The data came one day after revised data showed that the rate of growth in the U.K. economy in the third quarter was in line with preliminary estimates.
The Office for National Statistics said its second estimate of U.K. third-quarter gross domestic product was unchanged at 0.8% quarter-on-quarter, while the annual rate of growth was also unchanged at 1.5%.
It was the fastest quarterly rate of growth in over three years. Consumer spending rose by 0.8%, the fastest pace since the second quarter of 2010, the ONS said.
The euro slumped to 10-month lows against the pound on Friday, with EUR/GBP ending Friday’s session at 0.8300, the lowest since January. The pair was down 0.82% for the week.
Elsewhere, sterling ended the week at five year highs against the broadly weaker yen, with GBP/JPY settling at 167.74, the highest level since October 2008. For the week, the pair gained 2.32%.
The yen continued to be pressured by expectations that the Bank of Japan will implement further stimulus measures in order to meet its target of 2% inflation by 2015.
In the week ahead, investors will be focusing on Friday’s U.S. nonfarm payrolls report for November, amid expectations that the Federal Reserve will start to scale back its stimulus program at one of its next few meetings.
Data on the U.K.’s dominant service sector and the latest rate decision by the BoE 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, December 2
Federal Reserve Chairman Ben Bernanke is to speak at an event in Washington. Later Monday, the Institute of Supply Management is to release its manufacturing PMI.
Tuesday, December 3
The U.K. is to release its construction PMI.
Wednesday, December 4
The U.K. is also to publish its services PMI, a leading indicator of economic health.
The U.S. is to release the ADP report on private sector job creation, which leads the government’s nonfarm payrolls report by two days. The Institute of Supply Management is to release its services PMI. The U.S is also to publish data on new home sales and the trade balance, the difference in value between imports and exports.
Thursday, December 5
The BoE is to announce its benchmark interest rate.
The U.S. is to publish a revised estimate of third quarter gross domestic product, the broadest indicator of economic activity and the leading indicator of economic growth. Meanwhile, the Labor Department is to release its weekly report on initial jobless claims. The U.S. is also to publish data on factory orders.
Friday, December 6
The University of Michigan is to release the preliminary reading of its consumer sentiment index. The U.S. is to round up the week with the closely watched government data on nonfarm payrolls and the unemployment rate.