Investing.com - The pound ended the week lower against the U.S. dollar on Friday, tracking the euro’s losses as market sentiment was hit after ratings agency Standard and Poor’s downgraded nine countries in the euro zone, including France.
GBP/USD hit 1.5232 on Friday, the pair’s lowest since July 22, 2010; the pair subsequently consolidated at 1.5315 by close of trade on Friday, declining 0.68% over the week.
Cable is likely to find support at 1.5232, Friday’s low and resistance at 1.5469, the high of January 9.
The pound came under pressure on Friday after S&P cut ratings on Italy, Spain, Cyprus and Portugal by two notches and downgraded Malta, Slovakia and Slovenia by one level. Germany kept its triple-A rating.
French Finance Minister Francois Baroin said the loss of the triple-A rating was "not a catastrophe'' and stressed that France still had a solid AA+ rating.
Earlier Friday, an auction of Italian government debt met with weak investor demand, one day after an auction of Spanish government debt met with solid investor demand at sharply lower yields.
Meanwhile, talks aimed at negotiating a restructuring of Greece's debts broke down amid disagreements over how much money investors will lose by swapping their bonds, raising fears over a possible default.
Also Friday, official data showed that producer price inflation input in the U.K. fell more-than-expected in December, declining 0.6% after a 0.3% rise the previous month.
Analysts had expected producer price inflation input to be flat in December.
Sentiment slightly recovered on Thursday after European Central Bank President Mario Draghi said the bank saw signs of stabilization in the region’s economy, adding that the central bank’s recent refinancing operation had made a substantial contribution to improving the funding situation for banks.
The comments came after the ECB left the benchmark interest rate unchanged at 1.0%.
In the U.S., data on Thursday showed that the number of people who filed for unemployment assistance in the U.S. last week unexpectedly rose to 399,000 from 375,000 the previous week.
A separate report showed that U.S. retail sales rose less-than-expected in December.
Meanwhile, the Bank of England held its benchmark interest rate at a record-low 0.50%, where it’s stood since March 2009, in a widely expected move. The bank also kept the stock of asset purchases financed by the issuance of central bank reserves at GBP275 billion.
Earlier Thursday, official data showed that manufacturing production in the U.K. fell unexpectedly in November, while industrial production also declined unexpectedly.
In the week ahead, investors will be keeping a close eye on developments in the euro zone, amid concerns over the increased risk of sovereign debt contagion, while investors will also be looking ahead to U.S. data on inflation and the housing sector.
Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets.
Monday, January 16
The U.K. is to publish an industry report by property website Rightmove on house price inflation, a key gauge of the housing industry’s health.
Also Monday, markets in the U.S. are to remain closed for a national holiday.
Tuesday, January 17
The U.K. is to release a report by Nationwide Building Society on consumer confidence, an important indicator of consumer spending. The country is also to release official data on consumer price inflation, which accounts for a majority of overall inflation, followed by data on retail price inflation.
Bank of England Governor Mervyn King is also due to testify on the Financial Stability Report before the Treasury Committee, later in the day.
Meanwhile, the U.S. is to publish the Empire State Manufacturing index, an important gauge of economic health.
Wednesday, January 18
In the U.K., official data is to be produced on claimant count change, the first indication of the employment situation. The country is also to publish an official report on the employment rate, a key signal of overall economic health.
The U.S. is to release government data on producer price inflation, followed by data on net foreign purchases of long-term securities, which is the balance of domestic and foreign investment. The Federal Reserve is also to produce its capacity utilization rate, a key gauge of consumer inflation, as well as data on industrial production. The country is also to publish official data on crude oil inventories.
Thursday, January 19
The U.S. is to publish government data on building reports, an excellent gauge of future construction activity, as well as a government report on consumer price inflation. Later in the day, the U.S. Department of Labor is to release data on unemployment claims, followed by official data on housing starts and a separate report on manufacturing activity in the Philadelphia area.
Friday, January 20
The U.K. is to publish an official report on retail sales, the primary gauge of consumer spending.
The U.S. is to round up the week with a report by the National Association of Realtors on existing home sales, an important gauge of economic health.
GBP/USD hit 1.5232 on Friday, the pair’s lowest since July 22, 2010; the pair subsequently consolidated at 1.5315 by close of trade on Friday, declining 0.68% over the week.
Cable is likely to find support at 1.5232, Friday’s low and resistance at 1.5469, the high of January 9.
The pound came under pressure on Friday after S&P cut ratings on Italy, Spain, Cyprus and Portugal by two notches and downgraded Malta, Slovakia and Slovenia by one level. Germany kept its triple-A rating.
French Finance Minister Francois Baroin said the loss of the triple-A rating was "not a catastrophe'' and stressed that France still had a solid AA+ rating.
Earlier Friday, an auction of Italian government debt met with weak investor demand, one day after an auction of Spanish government debt met with solid investor demand at sharply lower yields.
Meanwhile, talks aimed at negotiating a restructuring of Greece's debts broke down amid disagreements over how much money investors will lose by swapping their bonds, raising fears over a possible default.
Also Friday, official data showed that producer price inflation input in the U.K. fell more-than-expected in December, declining 0.6% after a 0.3% rise the previous month.
Analysts had expected producer price inflation input to be flat in December.
Sentiment slightly recovered on Thursday after European Central Bank President Mario Draghi said the bank saw signs of stabilization in the region’s economy, adding that the central bank’s recent refinancing operation had made a substantial contribution to improving the funding situation for banks.
The comments came after the ECB left the benchmark interest rate unchanged at 1.0%.
In the U.S., data on Thursday showed that the number of people who filed for unemployment assistance in the U.S. last week unexpectedly rose to 399,000 from 375,000 the previous week.
A separate report showed that U.S. retail sales rose less-than-expected in December.
Meanwhile, the Bank of England held its benchmark interest rate at a record-low 0.50%, where it’s stood since March 2009, in a widely expected move. The bank also kept the stock of asset purchases financed by the issuance of central bank reserves at GBP275 billion.
Earlier Thursday, official data showed that manufacturing production in the U.K. fell unexpectedly in November, while industrial production also declined unexpectedly.
In the week ahead, investors will be keeping a close eye on developments in the euro zone, amid concerns over the increased risk of sovereign debt contagion, while investors will also be looking ahead to U.S. data on inflation and the housing sector.
Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets.
Monday, January 16
The U.K. is to publish an industry report by property website Rightmove on house price inflation, a key gauge of the housing industry’s health.
Also Monday, markets in the U.S. are to remain closed for a national holiday.
Tuesday, January 17
The U.K. is to release a report by Nationwide Building Society on consumer confidence, an important indicator of consumer spending. The country is also to release official data on consumer price inflation, which accounts for a majority of overall inflation, followed by data on retail price inflation.
Bank of England Governor Mervyn King is also due to testify on the Financial Stability Report before the Treasury Committee, later in the day.
Meanwhile, the U.S. is to publish the Empire State Manufacturing index, an important gauge of economic health.
Wednesday, January 18
In the U.K., official data is to be produced on claimant count change, the first indication of the employment situation. The country is also to publish an official report on the employment rate, a key signal of overall economic health.
The U.S. is to release government data on producer price inflation, followed by data on net foreign purchases of long-term securities, which is the balance of domestic and foreign investment. The Federal Reserve is also to produce its capacity utilization rate, a key gauge of consumer inflation, as well as data on industrial production. The country is also to publish official data on crude oil inventories.
Thursday, January 19
The U.S. is to publish government data on building reports, an excellent gauge of future construction activity, as well as a government report on consumer price inflation. Later in the day, the U.S. Department of Labor is to release data on unemployment claims, followed by official data on housing starts and a separate report on manufacturing activity in the Philadelphia area.
Friday, January 20
The U.K. is to publish an official report on retail sales, the primary gauge of consumer spending.
The U.S. is to round up the week with a report by the National Association of Realtors on existing home sales, an important gauge of economic health.