Forex - USD/GBP weekly outlook: May 13 - 17

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Investing.com - The dollar rose to two-week highs against the pound on Friday as the improving U.S. economic outlook fuelled hopes that the Federal Reserve would begin to wind up its quantitative easing program.

GBP/USD hit 1.5314 on Friday; the pair's lowest since April 25, before paring back losses to settle at 1.5365, down 0.55% for the day and 1.13% lower for the week.

Cable is likely to find support at 1.5263, the low of April 25 and resistance at 1.5586, Thursday's high.

The greenback was boosted as recent upbeat U.S. economic data fuelled optimism over an earlier-than-expected end to the Federal Reserve's USD85 billion a month asset purchase program.

Data on Thursday showed that showed that U.S. initial jobless claims fell to the lowest level since January 2008 in the week ending May 4.

Earlier this month official data showed that the U.S. economy added more jobs than forecast in April, pushing the unemployment rate to a more than four-year low of 7.5%.

The dollar's broad based rally saw the currency advance to its highest level since October 2008 against the yen on Friday.

The dollar rose above 101 per yen after data showed that Japanese investors became net purchasers of overseas bonds in the past two weeks as the Bank of Japan's massive easing program prompted investors to seek out higher yields overseas to compensate for lower yields on Japanese government bonds.

Sterling rose to its highest level against the yen since August 2009 on Friday, with GBP/JPY hitting session highs of 156.69, before settling at 156.07, up 0.43%.

The pound ended the week lower against the euro, with EUR/GBP easing up 0.15% to settle at 0.8454, 0.47% higher for the week.

In the week ahead, investors will be watching Wednesday's U.K. jobs data and the Bank of England's inflation report.

The U.S. is to release official data on retail sales, building permits, jobless claims and a closely watched report on consumer sentiment.

Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets.

Monday, May 13

The U.S. is to release official data on retail sales and business inventories.

Tuesday, May 14

The U.S. is to publish official data on import prices.

Wednesday, May 15

The U.K. is to release government data on the change in the number of people employed and the unemployment rate, a leading economic indicator.

The BoE is to release its quarterly inflation report. Governor Mervyn King is to speak at a press conference following the release of the report.

The U.S. is to release data on producer price inflation, industrial production, the capacity utilization rate and a report on manufacturing activity in New York State.

Thursday, May 16

The U.S. is to produce official data on building permits, the leading indicator of future construction activity as well as data on housing starts.

The U.S. is also to release official data on consumer inflation, initial jobless claims and the Philly Fed manufacturing index.

Friday, May 17

The U.S. is to round up the week with preliminary data from the University of Michigan on consumer sentiment and inflation expectations.




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This article appears in: Investing , Forex and Currencies

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