Investing.com - The pound sank to 17-month lows against the broadly stronger U.S. dollar on Friday after data showed that manufacturing growth in the U.K. unexpectedly slowed last month.
GBP/USD was down 1.61% to 1.5326 late Friday after a report showed that the Markit U.K. manufacturing index unexpectedly slid to a three-month low of 52.5 in December from 53.3 in November.
The data added to concerns that the rate of the economic recovery in the U.K. is moderating and underlined the diverging monetary policy stance between the Federal Reserve and other major central banks.
The U.S. dollar index, which measures the greenback against a basket of six major currencies, advanced 0.91% to nine-year peaks of 91.47 on Friday. The index rallied 12% in 2014, boosted by expectations that the Fed will raise interest rates in the coming year as the steady economic recovery in the U.S. continues.
Elsewhere, the dollar rose to four-and-a-half year highs against the euro and reached parity against the Swiss franc for the first time since December 2010 after remarks by European Central Bank President Mario Draghi fuelled expectations for full blown quantitative easing.
In an interview with German financial newspaper Handelsblatt Draghi said the risk of the ECB not fulfilling its mandate of price stability is higher now than six months ago, signaling that it is moving closer to implementing quantitative easing measures.
EUR/USD was down 0.85% to 1.2002 in late trade, the weakest level since early June 2010.
The single currency was also pressured lower after data showed that manufacturing activity in the euro area grew at a slower rate than initially estimated in December, adding to concerns over the outlook for fourth quarter growth.
USD/CHF was up 0.83% to 1.0014 in late trade as weakness in the euro added to pressure on the Swiss National Bank to defend its 1.20 per euro exchange rate floor.
Sterling was weaker against the euro, with EUR/GBP advancing 0.85% to 0.7830 late Friday.
In the week ahead, investors will be turning their attention to Friday’s U.S. nonfarm payrolls report for further indications on the strength of the recovery in the labor market. Wednesday’s Federal Reserve meeting minutes will be also closely watched.
The U.K. is to release survey data on service and construction sector growth and the Bank of England is to announce its latest monetary policy decision on Thursday.
Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets.
Monday, January 5
The U.K. is to release data on construction sector activity.
Tuesday, January 6
The U.K. is to publish a report on service sector activity.
In the U.S., the Institute of Supply Management is to release data on non-manufacturing activity.
Wednesday, January 7
The U.S. is to release a report on ADP nonfarm payrolls, in addition to data on the trade balance. Later Wednesday, the Federal Reserve is to publish the minutes of its most recent meeting.
Thursday, January 8
The BoE is to announce its monetary policy decision.
The U.S. is to produce its weekly report on initial jobless claims.
Friday, January 9
The U.K. is to produce a report on industrial and manufacturing production, as well as data on the trade balance.
The U.S. is to round up the week with the closely watched nonfarm payrolls report, and data on wage growth.