Investing.com - The pound ended Friday's session slightly lower
against the dollar in choppy trade after data showed that the U.S.
economy added far more jobs than expected last month, but also
indicated weak earnings growth and a drop in labor force
GBP/USD fell to session lows of 1.6819, before trimming back
losses to settle at 1.6874, just 0.11% lower for the day. For the
week, the pair gained 0.39%.
Cable was likely to find support at 1.6819 and resistance at
1.6918, the previous session's high and the strongest since August
The Labor Department reported Friday that the U.S. economy added
288,000 jobs in April, well above expectations for jobs growth of
210,000. The U.S. unemployment rate dropped to a five and a half
year low of 6.3%, compared to expectations for 6.6%.
The report also showed that the labor force participation rate,
which measures the proportion of people either working or looking
for work, fell to 62.8% from 63.2% in March. Meanwhile, average
wage growth edged down in April from the same month a year earlier,
dampening the medium term inflation outlook.
Earlier Friday, data showed that the U.K. construction
purchasing managers' index came in at 60.8, down from March's
reading of 62.5. It was the weakest reading since October 2013, but
pointed to very solid growth in the sector.
Sterling rose to almost five year highs against the dollar on
Thursday after data showed that manufacturing activity in the U.K.
expanded at the fastest rate in five months in April, bolstering
the outlook for the wider recovery.
A recent string of upbeat reports about the U.K. economy has
raised expectations the Bank of England could raise borrowing costs
ahead of other central banks.
The pound received an additional boost after preliminary data
showed that U.S. gross domestic product grew at an annual rate of
just 0.1% in the first quarter, well below forecasts for an
expansion of 1.2%.
Despite the sharp slowdown in growth the Federal Reserve said
Wednesday it would reduce its bond purchases to $45 billion a
month. The Fed also said interest rates would remain on hold at
record lows for a "considerable time" after the bond-buying program
ends later this year.
The U.S. central bank acknowledged that first quarter growth was
far weaker than expected, but added that growth had started to pick
up in recent weeks.
In the week ahead, investors will be looking ahead to Monday's
report on U.S. service sector activity and Wednesday's testimony by
Fed Chair Janet Yellen on monetary policy and the economy. U.K.
data on service sector growth and a rate review by the Bank of
England will also be in focus.
Ahead of the coming week, Investing.com has compiled a list of
these and other significant events likely to affect the
Monday, May 5
Markets in the U.K. are to remain closed for the May Day
In the U.S., the Institute of Supply Management is to publish a
report on service sector activity.
Tuesday, May 6
The U.K. is to publish what will be a closely watched report on
service sector growth.
The U.S. is to release data on the trade balance, the difference
in value between imports and exports.
Wednesday, May 7
Fed Chair Janet Yellen is to testify before the Joint Economic
Committee of Congress, in Washington.
Thursday, May 8
The U.S. is to publish the weekly report on initial jobless
Friday, May 9
The U.K. is to round up the week with data on manufacturing and
industrial production, as well as a report on the trade
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