Investing.com - The pound was sharply lower against the U.S. dollar on Friday, erasing the week’s gains as sustained worries over the handling of the debt crisis in the euro zone weighed on demand for riskier assets.
GBP/USD hit 1.5669 on Tuesday, the pair’s highest since December 28; the pair subsequently consolidated at 1.5424 by close of trade on Friday, declining 0.53% over the week.
Cable is likely to find support at 1.5361, the low of December 29 and resistance at 1.5571, the high of December 30.
Sterling fell to a six-day low against the dollar on Friday as concerns over the sovereign funding needs of troubled euro zone states, as well as signs of weakness in the region’s banking sector overshadowed better-than-expected U.S. jobs data.
The U.S. Department of Labor said nonfarm payrolls increased by 200,000 in December from a downwardly revised 100,000 the previous month and surpassing expectations for a 150,000 increase. The unemployment rate unexpectedly fell to 8.5%, the lowest level since February 2009.
Also Friday, a report showed that house price inflation in the U.K. fell 0.9% in December after a 1% decline the previous month.
The greenback found support earlier in the week after France sold EUR4.02 billion of 10-year bonds in an auction which met with solid demand but at higher yields.
France is seen as vulnerable to losing its triple-A credit rating in the coming weeks, after it was put on negative watch by ratings agencies Standard & Poor’s and Fitch’s in December, amid concerns over the handling of the financial crisis in the euro zone.
The French auction came one day after an auction of German 10-year government debt which encountered lower than average investor demand.
Demand for the dollar was also boosted as fears over the strength of the euro zone’s banking sector intensified after a report on Thursday showed that overnight deposits at the European Central Bank reached a new record high of EUR455 billion, indicating that European banks remain unwilling to lend to each other.
Meanwhile, a report showed that service sector activity in the U.K. unexpectedly accelerated to a five-month high in December, easing concerns that growth in the country's economy is faltering.
Markit’s U.K. service sector purchasing managers' index rose to 54.0 last month, its highest level since July, confounding expectations for a decline to 51.6.
In the week ahead, investors will be closely watching a meeting between French President Nicolas Sarkozy and German Chancellor Angela Merkel on Monday for any signs of progress in resolving the region’s two-year old debt crisis.
France, Greece, Germany, Italy and Spain are all scheduled to hold auctions of government debt, while the ECB is to hold its first policy-setting meeting of the New Year.
Also next week, the U.S. is to publish official data on retail sales and consumer sentiment, while the Bank of England is to announce its benchmark interest rate.
Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets.
Monday, January 9
In the U.S., Federal Open Market Committee member Dennis Lockhart is to speak.
Tuesday, January 10
In the U.K., the British Retail Consortium is to release a report on retail sales. The U.K. is also to produce industry data on house price balance, a key gauge of housing inflation.
Elsewhere, the U.S. FOMC members John Williams and Sandra Pianalto are to speak.
Wednesday, January 11
The U.K. is to release official data on the trade balance.
Later in the day, the U.S. is to produce official data on crude oil stockpiles, while the Federal Reserve is to release its Beige Book. In addition, FOMC member Dennis Lockhart is to speak.
Thursday, January 12
The U.K. is to release an official report on manufacturing production, a key indicator of economic health, while the National Institute of Economic and Social Research is to publish its monthly estimate of GDP. Later in the day, the Bank of England is to announce its benchmark interest rate.
Later Thursday, the U.S. is to release official data on retail sales and initial jobless claims. The country is also to publish government data on business inventories, a signal of future business spending, followed by a report on the federal budget balance.
Friday, January 13
The U.K. is to release official data on producer price inflation input, a leading indicator of consumer inflation.
The U.S. is to round up the week with data on the trade balance, as well as government data on import prices. In addition, the University of Michigan is to release preliminary data on inflation expectations and consumer sentiment, a leading indicator of consumer spending.
GBP/USD hit 1.5669 on Tuesday, the pair’s highest since December 28; the pair subsequently consolidated at 1.5424 by close of trade on Friday, declining 0.53% over the week.
Cable is likely to find support at 1.5361, the low of December 29 and resistance at 1.5571, the high of December 30.
Sterling fell to a six-day low against the dollar on Friday as concerns over the sovereign funding needs of troubled euro zone states, as well as signs of weakness in the region’s banking sector overshadowed better-than-expected U.S. jobs data.
The U.S. Department of Labor said nonfarm payrolls increased by 200,000 in December from a downwardly revised 100,000 the previous month and surpassing expectations for a 150,000 increase. The unemployment rate unexpectedly fell to 8.5%, the lowest level since February 2009.
Also Friday, a report showed that house price inflation in the U.K. fell 0.9% in December after a 1% decline the previous month.
The greenback found support earlier in the week after France sold EUR4.02 billion of 10-year bonds in an auction which met with solid demand but at higher yields.
France is seen as vulnerable to losing its triple-A credit rating in the coming weeks, after it was put on negative watch by ratings agencies Standard & Poor’s and Fitch’s in December, amid concerns over the handling of the financial crisis in the euro zone.
The French auction came one day after an auction of German 10-year government debt which encountered lower than average investor demand.
Demand for the dollar was also boosted as fears over the strength of the euro zone’s banking sector intensified after a report on Thursday showed that overnight deposits at the European Central Bank reached a new record high of EUR455 billion, indicating that European banks remain unwilling to lend to each other.
Meanwhile, a report showed that service sector activity in the U.K. unexpectedly accelerated to a five-month high in December, easing concerns that growth in the country's economy is faltering.
Markit’s U.K. service sector purchasing managers' index rose to 54.0 last month, its highest level since July, confounding expectations for a decline to 51.6.
In the week ahead, investors will be closely watching a meeting between French President Nicolas Sarkozy and German Chancellor Angela Merkel on Monday for any signs of progress in resolving the region’s two-year old debt crisis.
France, Greece, Germany, Italy and Spain are all scheduled to hold auctions of government debt, while the ECB is to hold its first policy-setting meeting of the New Year.
Also next week, the U.S. is to publish official data on retail sales and consumer sentiment, while the Bank of England is to announce its benchmark interest rate.
Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets.
Monday, January 9
In the U.S., Federal Open Market Committee member Dennis Lockhart is to speak.
Tuesday, January 10
In the U.K., the British Retail Consortium is to release a report on retail sales. The U.K. is also to produce industry data on house price balance, a key gauge of housing inflation.
Elsewhere, the U.S. FOMC members John Williams and Sandra Pianalto are to speak.
Wednesday, January 11
The U.K. is to release official data on the trade balance.
Later in the day, the U.S. is to produce official data on crude oil stockpiles, while the Federal Reserve is to release its Beige Book. In addition, FOMC member Dennis Lockhart is to speak.
Thursday, January 12
The U.K. is to release an official report on manufacturing production, a key indicator of economic health, while the National Institute of Economic and Social Research is to publish its monthly estimate of GDP. Later in the day, the Bank of England is to announce its benchmark interest rate.
Later Thursday, the U.S. is to release official data on retail sales and initial jobless claims. The country is also to publish government data on business inventories, a signal of future business spending, followed by a report on the federal budget balance.
Friday, January 13
The U.K. is to release official data on producer price inflation input, a leading indicator of consumer inflation.
The U.S. is to round up the week with data on the trade balance, as well as government data on import prices. In addition, the University of Michigan is to release preliminary data on inflation expectations and consumer sentiment, a leading indicator of consumer spending.