Forexpros – The pound ended the week slightly higher against the U.S. dollar on Friday, as market sentiment was boosted by fresh optimism over Greece and improving U.S. data, but concerns over the outlook for the U.K. economy kept sterling in check.
GBP/USD hit 1.5898 on Friday, the pair’s highest since February 8; the pair subsequently consolidated at 1.5869 by close of trade, easing up 0.14% on the week.
Cable is likely to find support at 1.5721, Friday’s low and resistance at 1.5928, the high of February 8 and a three-month high.
The pound rallied against the dollar on Friday, after official data showed that while U.K. gross domestic product contracted by 0.2% in the fourth quarter, consumer spending rose by 0.5%, the first quarterly increase in 18 months and exports jumped 2.3%.
In the euro zone, Greece launched a bond-swap offer to private-sector creditors Friday, formally inviting them to exchange their holdings of government debt for new securities.
Meanwhile, an auction of Italian government debt saw short-term borrowing costs fall, reassuring investors that the threat of contagion from Greece has abated.
The stronger tone of market sentiment was also supported by improving U.S. data. A report by the University of Michigan on Friday showed that its index consumer sentiment rose to 75.3 this month from 75 in January.
The data came one day after the U.S. Department of Labor said that the number of individuals filing for initial jobless benefits in the week ending February 18 held steady at 351,000, the fewest since March 2008.
The pound weaken broadly on Wednesday, falling to more than one-week low against the greenback and a two-and-a-half month low against the euro, after the minutes of the Bank of England’s February meeting sparked concerns that the central bank would opt for more monetary easing in the coming months.
The minutes showed that two policymakers supported a GBP75 billion increase to the bank’s asset purchase program, but the remainder of the monetary policy committee voted in favor of a GBP50 billion increase to GBP325 billion.
In the coming week, the European Central Bank is scheduled to launch a second liquidity operation on Wednesday, offering unlimited three-year loans to European lenders, after the bank carried out a similar successful operation in December.
Investors will also be focusing on Wednesday’s U.S. data on fourth quarter economic growth, in order to gauge the strength of the country’s economic recovery.
Ahead of the coming week, Forexpros has compiled a list of these and other significant events likely to affect the markets.
Monday, February 27
The U.S. is to publish industry data on pending home sales, a leading indicator of economic health.
Tuesday, February 28
The U.K. is to release an industry report on retail sales, a key gauge of consumer spending.
Later Tuesday, the U.S. is to produce official data on durable goods orders, a leading indicator of production, followed by industry data on house price inflation and consumer confidence.
Wednesday, February 29
The U.K. is to publish a report on consumer confidence, while the BoE is to publish data on net lending to individuals.
The U.S. is to release a preliminary report on fourth-quarter GDP, the broadest measure of economic activity and the primary gauge of the economy’s health. The country is also to report on manufacturing activity in the Chicago area.
Also Wednesday, Federal Reserve Chairman Ben Bernanke is due to testify on the semi-annual monetary policy report before the House Financial Services Committee in Washington.
Thursday, March 1
The U.K. is to release a report on house price inflation as well as data on manufacturing activity, a leading indicator of economic health.
The U.S. is to release government data on unemployment claims as well as personal consumption expenditures and personal spending. Meanwhile, the Institute for Supply Management is to produce a report on manufacturing activity. In addition, Fed Chairman Bernanke is due to testify for a second day before the Senate Banking Committee.
Friday, March 2
The U.K. is to round up the week with industry data on house price inflation as well as a report on construction sector growth, an important indicator of economic strength.
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