Investing.com - The pound ended the week lower against the dollar on Friday after a report showed that U.K. retail sales fell more sharply than expected in January, dampening optimism over the economic recovery.
GBP/USD was down 0.22% to 1.6614 at the close, and ended the week down 0.62%.
Cable is likely to find support at 1.6535 and resistance at 1.6724, Friday’s high.
The drop in the pound came after official data showed that U.K. retail sales fell 1.5% in January, the largest drop since April 2012 and worse than expectations for a 1% decline. The fall came after strong retail sales growth of 2.5% in December.
On a year-over-year basis, retail sales rose 4.3% from January 2013.
Earlier in the week, data showed that the U.K. unemployment rate unexpectedly ticked higher in the three months to December, reinforcing the view that the Bank of England is likely to keep interest rates on hold for some time to come.
On Wednesday, official data showed that the U.K. unemployment rate rose to 7.2% in the three months to December from 7.1% in the previous three months.
Analysts had expected the jobless rate to remain unchanged.
Separately, Wednesday’s minutes of the BoE’s February meeting showed that officials did not hold a vote before updating its forward guidance on rates this month, indicating a unanimous belief that an adjustment was necessary.
The bank updated its forward guidance earlier this month, saying it will not raise rates until the spare capacity in the U.K. economy has been fully absorbed, which it does not see happening until 2015.
In the U.S., data on Friday showed that existing home sales fell by a larger-than-forecast 5.1% in January, dropping to an 18-month low.
However, investors continued to look past a recent series of disappointing U.S. economic reports, attributing them to severely cold winter weather.
Wednesday’s minutes of the Federal Reserve’s January meeting showed that officials agreed the current pace of reductions to the bank’s asset purchase program would remain unchanged, so long as the economy shows signs of improvement.
The U.S. central bank is currently purchasing $65 billion of assets per month.
In the week ahead, the U.S. and the U.K. are both to publish revised data on fourth quarter growth. U.S. data on durable goods orders and consumer confidence will also be in focus.
Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets. The guide skips Monday, as there are no relevant events on this day.
Tuesday, February 25
The U.K. is to release private sector reports on mortgage approvals and retail sales.
The U.S. is to release data on consumer confidence and a private sector report on house price inflation.
Wednesday, February 26
The U.K. is to publish revised data on fourth quarter economic growth, as well as preliminary data on business investment.
The U.S. is to release data on new home sales, a leading indicator of demand in the housing market.
Thursday, February 27
The U.S. is to release data on durable goods orders, a leading indicator of production, and the weekly report on initial jobless claims.
Friday, February 28
The U.S. is to round up the week with revised data on fourth quarter growth, a report on manufacturing activity in the Chicago region, revised data on consumer sentiment and private sector data on pending home sales.