Investing.com - The pound fell to fresh 14-month lows against the dollar on Friday, after the Bank of England said inflation was likely to slow further, prompting investors to delay expectations for a U.K. rate hike until late next year.
GBP/USD fell to lows of 1.5594, the weakest since September 2013, before pulling back to 1.5671 in late trade, off 0.25% for the day. The pair ended the week with losses of 1.32%.
Sterling remained broadly weaker after the BoE said in its closely watched quarterly inflation report on Wednesday that inflation is likely remain below its 2% target in the near term and fall below 1% at some point during the next six months.
The bank said it now expects inflation to take three years to return to its 2% target.
The annual rate of U.K. inflation fell to a five-year low of 1.2% in September.
BoE Governor Mark Carney noted that since August markets had pushed back expectations for a rate increase to October of next year and added that investors were right to delay expectations.
The bank said it continued to expect economic growth of 3.5% this year but pared its forecast for growth in 2015 to 2.9% from 3.1% in August.
In the U.S., data on Friday showed that retail sales rose 0.3% in October, ahead of forecasts for a 0.2% increase.
Another report showed that the preliminary reading of the University of Michigan’s consumer sentiment index rose to a seven year high of 89.4 this month, better than forecasts of 87.5 and up from October’s reading of 86.9.
However, the report also showed that consumers expected annual inflation of 2.6% this year, down from expectations for inflation of 2.9% in October.
The US dollar index, which tracks the performance of the greenback against a basket of six major currencies, was down 0.25% to 87.61 in late trade, not far from the more than four-year highs of 88.36 hit earlier in the session.
In the week ahead, investors will be focusing on Wednesday’s minutes of the Federal Reserve’s October meeting and Thursday’s report on the U.S. consumer price index. Tuesday’s report on U.K. inflation and Wednesday’s 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, November 17
The U.S. is to release a report on manufacturing activity in the New York region, as well as data on industrial production.
Tuesday, November 18
The U.K. is to release data on consumer price inflation, which accounts for the majority of overall inflation.
The U.S. is to release data on producer price inflation.
Wednesday, November 19
The BoE is to publish the minutes of its latest policy meeting.
The U.S. is to release data on building permits and housing starts.
Later Wednesday, the Federal Reserve is to publish the minutes of its October meeting.
Thursday, November 20
The U.K. is to release data on retail sales, the government measure of consumer spending, which accounts for the majority of overall economic activity. The U.K. is also to release private sector data on industrial order expectations.
The U.S. is to release data on initial jobless claims, consumer prices, existing homes sales and manufacturing activity in the Philadelphia region.
Friday, November 21
The U.K. is to round up the week with data on public sector borrowing.