Forexpros – Last week saw the pound tumble to a one-month low against the U.S. dollar, before paring some of the week’s losses as risk sentiment briefly recovered after upbeat U.K. and U.S. data.
GBP/USD hit 1.5690 on Thursday, the pair’s lowest since October 20; the pair subsequently consolidated at 1.5803 by close of trade on Friday, tumbling 1.77% over the week.
Cable is likely to find support at 1.5680, the low of October 20 and resistance at 1.5931, the high of November 15.
The pound found support on Thursday as market sentiment improved after government data showed that U.S. building permits rose to the highest level since March 2010 in October, while U.S. housing starts were largely unchanged.
A separate report revealed that the number of people who filed for unemployment assistance in the U.S. in the week ending November 11 fell by 5,000 to a seven-month low of 388,000.
Also Thursday, official data showed that U.K. retail sales rose unexpectedly in October, climbing 0.6% after a 0.5% rise the previous month. Analysts had expected retail sales to fall 0.2% in October.
Sterling extended gains on Friday, amid speculation that the European Central Bank is considering lending to the International Monetary Fund to bail out troubled euro zone economies.
Meanwhile, Italy’s newly-appointed Prime Minister Mario Monti won a parliamentary confidence vote, leading the way to new structural reforms.
Following the vote, Italian bond yields fell back below the 7% threshold widely seen as unsustainable for borrowing in the long term. Spanish bond yields also eased after rising close to 7% at a government bond auction earlier in the week, as the ECB purchased Italian and Spanish government debt.
But the pound’s gains were capped by ongoing concerns over the handling of the debt crisis in the single currency bloc and after Bank of England policymaker Martin Weale said there was a “very strong case” for extending the central bank’s monetary easing program next year.
The comments came after the BoE’s quarterly Inflation Report said economic growth will be “significantly weaker” than forecast in August with a strong chance that annual growth rates will be below 1% throughout 2012.
In the week ahead, investors will be keeping a close eye on developments within the euro zone. Meanwhile, U.S. data on third quarter growth and durable goods orders will be closely watched, as well as U.K. data on house price inflation and the minutes of the BoE’s November policy meeting.
Ahead of the coming week, Forex Pros has compiled a list of these and other significant events likely to affect the markets. The guide skips Friday, as there are no relevant events on this day.
Monday, November 21
The U.K. is to release industry data on house price inflation, an important indicator of economic health.
Later in the day, the U.S. is to release industry data on existing home sales.
Tuesday, November 22
The U.K. is to produce official data on public sector borrowing.
Later Tuesday, the U.S. is to release preliminary data on gross domestic product, the broadest measure of economic activity and the leading indicator of the economy’s health. In addition, the U.S. Federal Reserve is to publish the minutes of its November policy meeting.
Wednesday, November 23
In the U.K., the BoE is to publish the minutes of its November policy meeting. The country is also to produce industry data on mortgage approvals, an important indicator of demand in the housing sector.
The U.S. is to publish a string of economic data, including a government report on durable goods orders, a leading indicator of production. The country is also to publish its weekly report on initial jobless claims, in addition to data on crude oil stockpiles, inflation, personal income and personal spending. Meanwhile, the University of Michigan is to release revised data on inflation expectations and consumer sentiment.
Thursday, November 24
The U.K. is also to publish revised data on third quarter economic growth. In addition, the U.K. is to publish data on industrial order expectations, as well as preliminary data on business investment, a leading indicator of economic health.
Also Thursday, markets in the U.S. are to remain closed for the Thanksgiving holiday.
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