Forex Pros – Last week saw the pound rally to a 16-month high against the broadly weaker U.S. dollar as concerns over U.S. debt and monetary policy saw investors move into higher yielding currencies.
GBP/USD hit 1.6599 on Thursday, the pair’s highest since April 12, 2009; the pair subsequently consolidated at 1.6506 by close of trade on Friday, jumping 1.19% over the week.
Cable was likely to find support at 1.6306, the low of April 20 and resistance at 1.6597, last Thursday’s high and a 16-month high.
Data on Thursday showed that retail sales in the U.K. posted a surprise increase for March, helped by stronger food sales but did little to alter the picture of fragile consumer demand that is keeping the Bank of England from raising interest rates.
Also Thursday, Bank of England policymaker Martin Weale said Britain’s recovery in the first quarter has been disappointing, adding that the Bank’s forecasts in May could be crucial to his next vote on interest rates.
His comments add to signs that the momentum for raising rates has stalled after a batch of weak economic data and a surprise drop in inflation in March.
Earlier in the week, Standard & Poor’s warned the U.S. government that it risked losing its AAA credit rating unless policy makers agree on a plan by 2013 to reduce budget deficits and the national debt. S&P maintained its top rating on U.S. long-term debt while lowering the outlook to negative for the first time.
Looking ahead, in a week that will be shortened by holidays in many places, the highlight will be on Wednesday, when Fed Chairman Ben Bernanke holds a press conference after the bank’s rate setting meeting, the first ever regularly scheduled briefing by a Fed chief in the U.S. central bank’s 97-year history.
The U.K., meanwhile, is to publish preliminary data on first quarter gross domestic product.
Ahead of the coming week, Forex Pros has compiled a list of these and other significant events likely to affect the markets.
Monday, April 25
Markets in the U.K., the euro zone, Switzerland, Australia and New Zealand will all be closed for the Easter Monday holiday.
Meanwhile, the U.S. is to publish government data on new home sales, a leading indicator of economic health.
Tuesday, April 26
In the U.K. the Confederation of British Industry is to publish a report on industrial order expectations, a leading indicator of economic health, while Bank of England policymaker Andrew Sentence is to speak at an event in Manchester. His comments will be closely watched for any clues to the future possible direction of monetary policy.
Also Tuesday, the U.S. is to publish reports on house price inflation and consumer confidence, as well as official data on manufacturing activity in Richmond.
Wednesday, April 26
The U.K. is to publish preliminary data on first quarter GDP, the broadest measure of economic activity and the primary gauge of the economy’s health.
The U.S. is to publish official data on durable goods orders, a leading indicator of production and crude oil inventories. Also Wednesday, the Federal Reserve is to announce its federal funds rate. The announcement is to be followed by the first ever regularly scheduled briefing by a Fed chief in the U.S. central bank’s 97-year history.
Thursday, April 27
In the U.K., market research group Gfk is to publish data on consumer confidence.
Also Thursday, the U.S. is to publish advance data on first quarter gross domestic product, the broadest measure of economic activity and the primary gauge of the economy’s health. The country is also to publish government data on initial jobless claims and a report on pending home sales.
Friday, April 29
Markets in the U.K. are to remain closed for a public holiday.
The U.S. is to round up the week by releasing a flurry of data, with a government report on personal spending, personal income and personal consumption expenditures. The U.S. is also to publish a report on manufacturing activity in the in the Chicago area, while the University of Michigan is to publish revised data on consumer sentiment and inflation expectations.
Later in the day, Fed Chairman Ben Bernanke is to speak at a public engagement. His comments will be closely watched for any clues to the possible future direction of monetary policy.
ForexPros.com
