Forex Pros - The pound closed lower against the U.S. dollar last week, dropping to a two-week low on Friday after worse-than-expected U.K. data underlined the view that the Bank of England is likely to keep interest rates low for some months to come.
GBP/USD hit 1.6212 on Friday, the pair's lowest since May 25; the pair subsequently consolidated at 1.6225 by close of trade, dropping 1.15% over the week.
Cable is likely to find support at 1.6130, the low of May 25 and resistance at 1.6466, Thursday's high.
The pound fell sharply on Friday after official data showed that manufacturing production contracted by 1.5% in April, after rising 0.2% in the previous month. Analysts had expected manufacturing production to decline by 0.1% in April.
A separate report showed that industrial output fell 1.7% in April, as an extra public holiday for the royal wedding hurt orders and the impact of the Japanese earthquake hit supplies.
On Thursday, the Bank of England left its official cash rate unchanged at a record low of 0.5% for the 27th consecutive month, as fears over a slowdown in domestic economic growth overshadowed concerns about above target inflation.
Data released late last month confirmed that U.K. gross domestic product grew just 0.5% in the first quarter, after contracting by the same amount in the final quarter of 2010.
Meanwhile, the bank said last month that inflation would be back on target within the next two years.
Looking ahead to the coming week, U.S. data on retail sales and consumer price inflation will be a focus of attention. Meanwhile, the U.K. is to produce key data on consumer price inflation and on the claimant count change.
Ahead of the coming week, Forex Pros has compiled a list of these and other significant events likely to affect the markets.
Monday, June 13
In the U.S., Federal Reserve Bank of Dallas President Richard Fisher is to speak at a public engagement.
Meanwhile, the BoE is to publish its quarterly bulletin, which provides a detailed analysis of current and future economic conditions from the bank's point of view. The country is also to publish industry data on house prices.
Tuesday, June 14
The U.K. is to release government data on consumer price inflation, which accounts for a majority of overall inflation. The country is also to publish data on a leading index designed to predict the direction of the economy.
Later in the day, the U.S. is to produce official data on producer price inflation, a leading indicator of consumer inflation. The country is also due to publish government data on retail sales, the primary gauge of consumer spending, which accounts for the majority of overall economic activity.
Wednesday, June 15
The U.K. is to publish government data on claimant count change and the country's unemployment rate. Later in the day, BoE Governor Mervyn King is to speak at a public engagement; his comments will be closely watched for any clues to the future possible direction of monetary policy.
Meanwhile, the U.S. is to release a flurry of data, including reports on consumer price inflation, industrial production and the capacity utilization rate, leading indicators of economic health.
The U.S. is also to publish government data on the balance of domestic and foreign investment as well as official data on crude oil inventories and manufacturing activity in New York state.
Thursday, June 16
The U.K. is to publish official data on retail sales, the primary gauge of consumer spending, which accounts for the majority of overall economic activity.
Later in the day, the U.S. is to publish its weekly report on initial jobless claims as well as official data on building permits and housing starts, an excellent gauge of future construction activity. The country is also to produce data on its current account and natural gas stockpiles, while the Federal Reserve Bank of Philadelphia is to publish an index of manufacturing activity.
Friday, June 17
The U.S. is to round up the week with a report on an index of leading indicators, which is designed to predict the direction of the economy, while the University of Michigan is to publish preliminary data on consumer sentiment and inflation expectations.