Forexpros – The pound moved higher against the U.S. dollar on Friday, trimming some of the week’s losses as heavy selling in the EUR/GBP pair, sparked by ongoing concerns over the debt crisis in the euro zone, supported sterling.
GBP/USD hit 1.5361 on Thursday, the pair’s lowest since October 6; the pair subsequently consolidated at 1.5548 by close of trade on Friday, shedding 0.82% over the week.
Cable is likely to find support at 1.5361, Thursday’s low and resistance at 1.5691, the high of December 28.
Thin trading volumes exacerbated moves in the GBP/USD pair as U.K. markets closed early on Friday and markets are to remain closed on Monday.
Sterling preformed poorly against the dollar in 2011, falling approximately 1%, as concerns over the ongoing financial crisis in the single currency bloc bolstered demand for the relative safety of the greenback.
On Thursday, Italy’s Treasury sold just over EUR7 billion of long-term debt maturing between 2014 and 2022, below the maximum target of EUR8.5 billion.
Following the auction, Italian 10-year bond yields remained above the 7% threshold seen as unsustainable in the long term, fuelling fears that the euro zone’s bailout facility would be insufficient if Italy is forced to seek financial aid.
The sale was seen as the first test of European banks’ willingness to purchase long-term sovereign debt of distressed euro zone countries, following a EUR500 billion liquidity operation by the European Central Bank.
Elsewhere, Spain’s new government said its 2011 budget deficit may be much wider than initially forecast and joined with Italy in a push for austerity measures aimed at restoring investor confidence.
The pound has gained around 2.5% against the euro since the beginning of 2011 but speculation that the Bank of England may increase its asset purchase program in the coming months as part of an effort to shore up economic growth looks likely to weigh on the currency.
In the week ahead, trading volumes are expected to remain light, with markets in the U.S. and the U.K. closed on Monday. Also next week, the U.S. is to release key reports manufacturing activity, jobless claims and non-farm employment change.
Ahead of the coming week, Forex Pros has compiled a list of these and other significant events likely to affect the markets.
Monday, January 2
Markets in Japan, the U.S., U.K., euro zone, Australia and New Zealand will be remaining closed for national holidays.
Tuesday, January 3
The U.K. is to publish data on manufacturing activity, a leading indicator of economic health.
The U.S. is to publish data on manufacturing activity, a leading indicator of economic health, while the Federal Reserve is to release the minutes of its most recent policy-setting meeting.
Wednesday, January 4
The U.K. is to produce data on construction sector activity, a leading indicator of economic health. The BoE is also to release a report on net lending to individuals.
Meanwhile, the U.S. is to publish government data on factory orders, a leading indicator of production.
Thursday, January 5
The U.K. is to produce a report on house price inflation, a key indicator of the housing industry’s health, followed by data on services sector growth. Later in the day, the BoE is to release its credit conditions survey.
Elsewhere, the U.S. is to publish industry data on non-farm employment change, a key indicator of consumer spending, followed by weekly government data on unemployment claims. The country is also to release a report by the Institute for Supply Management on service sector activity, as well as data on crude oil stockpiles.
Friday, January 6
The U.S. is to round up the week with a government reports on non-farm employment change and the unemployment rate. The country is also to release government data on average hourly earnings, a key indicator of consumer inflation.
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