Investing.com - The pound fell to more than five-year lows against the broadly stronger dollar on Friday as dovish comments by Bank of England Governor Mark Carney highlighted the diverging monetary policy stance with the Federal Reserve.
GBP/USD hit a trough of 1.4700, the weakest since June 22, 2010, and was last at 1.4746, down 0.91% for the day.
BoE Governor Carney said Thursday that the recent strengthening of sterling could keep inflation low and result in a slower pace of rate hikes. He reiterated the remarks in a newspaper interview published on Friday.
Demand for the greenback continued to be underpinned by growing expectations that the Fed could start rising interest rates mid-year.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, advanced 1.22% to 100.32 late Friday, a level last reached in April 2003.
Sterling was higher against the euro, with EUR/GBP at 0.7116, holding above the seven-year low of 0.7013 set on Wednesday.
The single currency weakened across the board after the European Central Bank started asset purchases under its trillion-euro stimulus program on Monday, pushing euro area bond yields to new lows. Lower bond yields make the euro less attractive to investors.
EUR/USD hit fresh 12-year lows of 1.0462 on Friday, before pulling back to 1.0496 in late trade, still down 1.31% for the day.
In the week ahead, investors will be focusing their attention on Wednesday’s Federal Reserve policy statement to see if it would drop its reference to being patient before raising rates. Wednesday’s U.K. jobs report and BoE minutes will also be closely watched.
Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets.
Monday, March 16
The U.S. is to produce reports on industrial production and manufacturing activity in the New York region, as well as private sector data on the housing market.
Tuesday, March 17
The U.S. is to report on building permits and housing starts.
Wednesday, March 18
The U.K. is to publish its latest employment report, which includes a look at the unemployment rate, the change in the number of people employed and average earnings.
At the same time, the BoE is to publish the minutes of its February meeting.
The Fed is to announce its federal funds rate and publish its rate statement, which outlines economic projection and the factors affecting the monetary policy decision. Fed Chair Janet Yellen is to hold what will be a closely watched a post-policy meeting press conference.
Thursday, March 19
The U.S. is to release reports on jobless claims, the current account and manufacturing activity in the Philadelphia region.
Friday, March 20
The U.K. is to round up the week with data on public sector borrowing.