Investing.com - The pound was higher against the dollar on
Friday following comments by Bank of England Governor Mervyn King,
while U.S. inflation data indicated that the Federal Reserve had
sufficient scope to continue its asset purchase program.
GBP/USD hit a session high of 1.5176 on Friday; the pair's highest
since March 5, before settling at 1.5111, 0.19% higher for the day
and 1.36% higher for the week.
Cable was likely to find support at 1.4914, Thursday's low and
resistance at 1.5197, the high of March 5.
The dollar turned broadly lower after the Labor Department reported
that U.S. consumer price inflation rose 0.7% in February, bringing
the annualized rate of consumer inflation to 2.0%.
Core consumer prices, which exclude volatile food and energy costs,
also rose 2% year-on-year.
In December, the U.S. central bank said an "exceptionally low"
target interest rate is appropriate as long as inflation isn't
forecast to rise to more than 2.5%.
Sentiment on the dollar was also hit after data showed that the
University of Michigan's consumer sentiment index dropped to 71.8
in March, the lowest level since December 2011, from a final
reading of 77.6 in February.
The disappointing data sparked profit taking ahead of an upcoming
Federal Reserve policy meeting after a recent string of strong U.S.
economic data reinforced optimism over the country's economic
recovery and saw the dollar strengthen across the board.
The pound found support after BoE Governor Mervyn King said the
recent sharp fall in sterling had gone far enough, adding the pound
was now 'properly valued' and that an economic recovery 'was in
sight'.
The pound fell to three-and-a-half year lows against the dollar
earlier in the week after data showed that manufacturing output in
the U.K. posted the steepest drop since June in January,
underlining concerns over the risk of a triple-dip recession and
more easing by the BoE.
In the week ahead investors will be focusing on Wednesday's Federal
Reserve policy statement, amid speculation over an
earlier-than-expected end to the bank's asset purchase program. Fed
Chairman Ben Bernanke is to give a press conference after the
release of the policy statement.
Investors will also be awaiting minutes from the BoE's March
meeting and the U.K. government's annual budget statement. The
minutes of the bank's February meeting indicated that three
policymakers including Governor King voted in favor of more easing.
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 and Friday as there are no relevant events
on these days.
Tuesday, March 19
The U.K. is to publish official data on consumer price inflation,
which accounts for the majority of overall inflation and data on
the producer price index and the retail price index.
Later Tuesday, the U.S. is to release official data on building
permits, a leading indicator of future construction activity, and
data on housing starts.
Wednesday, March 20
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.
Meanwhile, the BoE is to publish the minutes of its February
meeting and the U.K. government is to unveil its annual budget
statement.
In the U.S., the Federal Reserve is to announce the federal funds
rate and release its rate statement and quarterly economic
projections. The announcement is to be followed by a press
conference with Fed Chairman Ben Bernanke to discuss monetary
policy and the economic outlook.
Thursday, March 21
The U.K. is to release official data on retail sales, the
government measure of consumer spending, which accounts for the
majority of overall economic activity. The country is also to
release official data on public sector net borrowing and private
sector data on industrial order expectations.
The U.S. is to release the weekly government report on initial
jobless claims, as well as industry data on existing home sales and
official data on manufacturing activity in Philadelphia.
Investing.com -
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