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Forex - GBP/USD weekly outlook: June 16 - 20


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Investing.com - The pound rose to almost five-year highs against the dollar on Friday, one day after Bank of England Governor Mark Carney said U.K. interest rates could rise sooner than investors expect.

GBP/USD was up 0.24% to 1.6968 late Friday, after rising as high as 1.6990 earlier in the session, close to the five year high of 1.6898 set on May 6. The pair ended the week with gains of 0.99%.

Cable is likely to find support at 1.6920, Friday's low and resistance at the 1.7000 level.

Sterling's gains came after Carney said Thursday that rapid economic growth and the steep decline in the jobless rate mean that the time to begin raising interest rates is growing closer.

"There's already great speculation about the exact timing of the first rate hike and this decision is becoming more balanced. It could happen sooner than markets currently expect," the BoE governor said.

Official data on Wednesday showed that the U.K. unemployment rate fell to a five-year low of 6.6% in the three months to April.

Carney said the bank will monitor the labor market closely to determine the right moment to start raising rates and reiterated that when rates do start to rise they will do so only gradually.

The comments prompted investors to bring forward expectations for a rate hike by the BoE. Some market watchers already expect the central bank to start raising rates from their record low 0.5% late this year.

In the U.S., data on Friday showed that U.S. consumer sentiment unexpectedly deteriorated in June.

The preliminary reading of the University of Michigan's consumer sentiment index for June came in at 81.2, down from 81.9 in May, missing expectations for an uptick to 83.0.

Elsewhere, sterling rose to one-and-a-half year highs against the broadly weaker euro on Friday, with EUR/GBP down 0.30% to 0.7981 at the close of trade, extending the week's losses to 1.32%.

In the week ahead, investors will be focusing on the outcome of Wednesday's Federal Reserve policy meeting, while U.K. data on retail sales and consumer prices 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, June 16

The U.S. is to produce data on industrial production and manufacturing activity in the Empire State.

Tuesday, June 17

The U.K. is to release data on consumer price inflation, which accounts for a majority of overall inflation.

Later Tuesday, the U.S. is to produce data on housing starts, building permits and consumer prices.

Wednesday, June 18

The BoE is to publish the minutes of its latest policy setting meeting.

Later Wednesday, the Federal Reserve is to announce its federal funds rate and publish its rate statement. The announcement is to be followed by a press conference with Fed Chair Janet Yellen.

Thursday, June 19

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.S. is to publish the weekly report on initial jobless claims as well as a report on manufacturing activity in the Philadelphia region.

Friday, June 20

The U.K. is to round up the week with data on public sector net borrowing.

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