Investing.com - The pound extended gains against the dollar and
the euro into a second day on Friday after incoming Bank of England
Governor Mark Carney downplayed the possibility of a major change
to current monetary policy.
GBP/USD hit 1.5843 on Friday, the pair's highest since February 1;
the pair subsequently consolidated at 1.5801, 0.54% higher for the
day and up 0.26% for the week.
Cable is likely to find support at 1.5703, Friday's low and
resistance at 1.5877, the high of January 1.
In testimony before the U.K.'s Treasury Select Committee on
Thursday, Carney called for a review of the Bank's inflation
mandate and said Britain might benefit from a commitment to keep
interest rates low for a fixed period as well as a more "flexible"
inflation targeting regime that tolerated inflation remaining
higher for longer.
He added that 'considerable monetary stimulus' will still be needed
when he joins the bank in June.
The BoE kept interest rates on hold at 0.5% and announced no
changes to its easing program on Thursday. In an unusual move, the
bank released a rate statement in which it said that it was
appropriate to look beyond the fact that inflation is currently
running above target, as removing stimulus would risk derailing the
EUR/GBP hit a session low of 0.8447 on Friday before settling back
at 0.8462, down 0.76% for the day and down 1.32% for the week.
In the U.S., government data on Friday showed that the trade
deficit narrowed to the smallest since January 2010 in December as
exports rose sharply.
The upbeat data fuelled hopes that figures for fourth quarter
growth may be revised upwards after preliminary data last week
showed that the economy contracted by an annualized 0.1% in the
three months to December.
The Commerce Department said trade deficit narrowed to USD38.5
billion from a USD48.6 billion deficit in November, compared to
expectations for a deficit of USD46.0 billion.
In the week ahead, investors will be anticipating U.S. data on
retail sales and consumer sentiment, while U.K. data on consumer
prices will be in focus.
Ahead of the coming week, Investing.com has compiled a list of
these and other significant events likely to affect the markets.
The guide skips Monday as there are no relevant events on this day.
Tuesday, February 12
The U.K. is to publish official data on consumer prices, which
account for a majority of overall inflation as well as industry
data on house prices.
Later in the day, the U.S. is to publish data on the federal budget
Wednesday, February 13
In the U.K., the BoE is to release its quarterly inflation report,
which includes forecast for inflation over the following two years.
The release is to be followed by a press conference with BoE
Governor Mervyn King.
Later in the day, the U.S. is to publish official data on retail
sales, the government measure of consumer spending, which accounts
for the majority of overall economic activity. The U.S. is also to
publish data on import prices, business inventories and crude oil
Thursday, February 14
The U.S. is to release the weekly government report on initial
Friday, February 15
The U.K. is to release government data on retail sales.
The U.S. is to round up the week with data on manufacturing
activity in New York state and industrial production, while the
University of Michigan is to release preliminary data on consumer
sentiment and inflation expectations.
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