Investing.com - The pound fell to three-week lows against the dollar on Friday amid concerns over escalating geopolitical tensions between Russia and the West before recovering slightly late in the session.
GBP/USD touched lows of 1.0737, the weakest since June 30 before pulling back to 1.0786 late Friday, ending the day down 0.08%. For the week, the pair lost 0.20%. It was the second straight week of losses after the pair hit an almost six-year high of 1.7190 on July 15.
Cable is likely to find support at around the 1.7000 level and resistance at 1.7150.
The drop in the pound came amid increased demand for save haven assets following the shooting down of a Malaysia Airlines jet in eastern Ukraine. Moscow has denied involvement in the crash, which came a day after the U.S. announced a fresh round of sanctions against Russia for supporting separatists in east Ukraine.
Markets were also unsettled as Israel expanded its ground offensive in Gaza.
Demand for the dollar continued to be underpinned after Federal Reserve Chair Janet Yellen indicated earlier in the week that interest rates may rise sooner if the economy continues to improve.
The US Dollar Index, which tracks the performance of the greenback versus a basket of six other major currencies, was at 80.60 late Friday, after rising to one-month highs of 80.75 earlier in the session.
Elsewhere Friday, sterling also edged lower against the euro, with EUR/GBP touching highs of 0.7934 before easing back to 0.7914 at the close, not far from Wednesday’s 22-month low of 0.7880.
The single currency remained under pressure after the Bank of Italy cut its growth forecast for 2014 to 0.2% from 0.7% on Friday and warned that risks to the economy remained to the downside.
The announcement underlined concerns over the faltering economic recovery in the currency bloc.
Earlier in the week European Central Bank President Mario Draghi said that large scale asset purchases are “squarely” within the bank’s mandate. The remarks were the latest indication that the central bank is open to further monetary easing measures to stave off the risk of deflation in the euro area.
In the week ahead, the U.S. is to release what will be closely watched data on consumer prices, home sales and manufacturing orders. Investors will also be awaiting data on second quarter growth from the U.K.
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, July 22
The U.K. is to release data on public sector net borrowing.
The U.S. is to release reports on consumer price inflation and existing home sales.
Wednesday, July 23
The Bank of England is to publish the minutes of its latest policy meeting, which contain valuable insights into economic conditions from the bank’s perspective. Later in the day, BoE Governor Mark Carney is to speak.
Thursday, July 24
The U.K. is to release data on retail sales, the government measure of consumer spending, which accounts for the majority of overall economic activity.
The U.S. is to produce data on unemployment claims, manufacturing activity and new home sales.
Friday, July 25
The U.K. is to release preliminary data on second quarter gross domestic product, the broadest indicator of economic activity and the leading measure of the economy’s health.
The U.S. is to round up the week with data on durable goods orders.